Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BIRMINGHAM CORPORATION BILL

Read the Third time and passed.

DARTFORD TUNNEL BILL

As amended, considered; to be read the Third time.

GREAT NORTHERN LONDON CEMETERY COMPANY BILL [Lords]

LANCASHIRE QUARTER SESSIONS BILL [Lords]

POOLE CORPORATION BILL [Lords]

RIVER WEAR WATCH (DISSOLUTION) BILL [Lords]

Read a Second time and committed.

Oral Answers to Questions — EMPLOYMENT

Industrial Training, Scotland

Mr. Hector Hughes: asked the Minister of Labour what statistics are kept by Her Majesty's Government of youths in technical training in Scotland; and what steps are taken to publicise this information.

The Minister of Labour (Mr. John Hare): Statistics kept by my Department show the numbers of youths who enter employment as apprentices or learners in skilled occupations. These figures are published annually in the Ministry of Labour Gazette.
Statistics kept by the Scottish Education Department show the numbers of students enrolled for full-time and part-time courses in central institutions and establishments of further education. These are published in the annual reports of the Secretary of State on Education in Scotland. The decennial

census of the population gives statistics of the numbers of apprentices analysed by age, occupation, industry and area. These have been published by the Registrar General for Scotland for the 1951 census; and similar figures will be published after the 1961 census.

Mr. Hughes: While thanking the Minister for that comprehensive reply, may I ask if he realises that my purpose in putting the Question was to emphasise the importance of enabling youths, particularly school leavers, to plan their careers ahead so that they can fit into national productivity and exports with advantage to themselves and to the nation?

Mr. Hare: I am grateful to the hon. and learned Member and entirely agree with everything he has said.

Mr. Willis: asked the Minister of Labour how many Scottish employers have informed him of their intention to increase their training programmes so as to provide extra apprenticeships and other forms of training during the years 1961 to 1963; and what proportion this represents of the employers approached by the Industrial Training Council in this connection.

Mr. Hare: The detailed information for which the hon. Member asks is not available. But the hon. Member will be glad to hear that many firms are announcing their intention to increase their intake of apprentices.

Mr. Willis: Is it not rather regrettable that the right hon. Gentleman has not got this information? How does he expect to deal with this problem, which is exceedingly serious, if he has not got any information about it?

Mr. Hare: I honestly do not think that even the hon. Gentleman would say that there is much point in keeping statistics about intentions. I am much more interested in statistics about facts.

Mr. Willis: The Minister has not got those either.

Mr. Hare: Therefore, I do not think that statistics of the sort the hon. Gentleman asks for would be useful. However, my hon. Friend the Parliamentary Secretary and myself in going round the country have found that immense interest is


being taken in this, and I am convinced that satisfactory action will follow.

Mr. Prentice: Did not the Industrial Training Council last year circulate large firms throughout the United Kingdom? Why cannot the Scottish aspect of this problem be extracted from the replies the Council received so that my hon. Friend can have an answer?

Mr. Hare: The trouble about that is that it was a very incomplete exercise because many people at that time were not prepared to say what their intentions were.

Mr. Malcolm MacPherson: asked the Minister of Labour how many training development officers are working in Scotland under the auspices of the Industrial Training Council.

Mr. Hare: The Industrial Training Council's Training Advisory Service has been and will continue to be generally available to assist industries and individual firms in Scotland. In addition, from 1st May, the Council has appointed a training development officer based on Glasgow, who will work in Scotland.

Mr. Malcolm MacPherson: Does the Minister consider that to be satisfactory—one officer only for Scotland as Scotland, plus the functioning Service as a whole? Does he not realise that these officers were intended to be especially concerned with the co-ordination of training in small firms, and is not Scotland especially backward in that regard? Will not he, therefore, try to do rather more?

Mr. Hare: It is important to realise that the general effort being made by the Industrial Training Council also includes a particular effort in Scotland. This extra officer is being trained to work in Scotland alone, and his efforts will supplement those already being made.

Mr. Ross: asked the Minister of Labour what is the estimated expenditure for the financial year 1961–62 by the Industrial Training Council for their work in connection with the expansion of industrial training in Scotland.

Mr. Hare: The work of the Industrial Training Council extends throughout Great Britain, and it is not possible to give separate information about Scotland.

Mr. Ross: But the Minister will surely remember his Answer to Question No. 21, asked by my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson). The right hon. Gentleman then said that a special effort was being made in Scotland, and told us about the appointment of one additional training development officer. Are we to understand that the right hon. Gentleman cannot explain what is to happen there? Is he aware that for this purpose a predecessor of his arranged for a special grant of £75,000 to be spent over five years, that 40 per cent. of that time has gone and only 20 per cent. of the money has been spent, and that, as far as I can make out from the figures, the rate of expenditure in Scotland for this important job has been less than £1,000 a year?

Mr. Hare: As I told the hon. Gentleman, it is impossible to give separate figures for Scotland, but expenditure on this administrative side is, in fact, increasing.

Mr. Millan: asked the Minister of Labour what plans he has for providing courses of first year apprenticeship training at Government training centres in Scotland in trades other than engineering.

Mr. Hare: My officers are negotiating with the industry about a course in radio and television servicing at the Hillington Government Training Centre and I am hopeful that a class will be set up. In addition, consultations covering Great Britain are taking place with the heating and ventilating and electrical contracting industries.

Mr. Millan: Even so, is this not rather disappointing progress? Can the Minister say whether this arises from lack of interest among Scottish employers or from lack of initiative on the part of the Minister? Has he any other proposals in mind for the near future?

Mr. Hare: These are the proposals. In addition, as the hon. Gentleman knows, two new classes in engineering will be started this year.

Mr. Lawson: asked the Minister of Labour, what steps are being taken in Scotland by the Industrial Training Council to promote group apprenticeship schemes among small and medium-sized firms.

Mr. Hare: The Industrial Training Council seeks to promote the expansion of all types of industrial training and will suggest the adoption of a group apprenticeship scheme where this is the appropriate course.

Mr. Lawson: Are we to understand from the Minister that this one officer who has been appointed in Scotland has been engaged in this job or is now engaged in it, and can he say what success he has had with this group of employers? Will he bear in mind that this group of small and medium-sized employers are among the employers who are failing the Scottish nation? What drastic step does the right hon. Gentleman propose to take to remedy this defect?

Mr. Hare: The officer will not be appointed till 1st May. On the other hand, the work of the Industrial Training Council has been going on solidly and it is recommending to industries the particular courses in which it considers training is most appropriate. I agree with the hon. Gentleman that there is an important place for the small employer in these group apprenticeship training schemes. There is also the benefit, if they choose to use them, of training schemes such as we run at our own G.T.C.s, as well as the facilities which the Ministry of Education is making available. Using one of these three avenues of approach should solve the problem.

Mr. Lee: Would the Minister not agree that so far the Industrial Training Council has been singularly unsuccessful in getting group apprenticeship schemes started? Does he recall that four were begun in 1960? Will he say now whether such huge organisations as the Engineering Employers' Federation has withdrawn its opposition to this scheme and is now co-operating in it?

Mr. Hare: There is no doubt that we are all disappointed at the slowness of the start. On the other hand, there are signs that far greater interest is now being shown. One thing I can tell the hon. Gentleman is that in my trips to the regions, I have been impressed by the fact that everywhere more interest is being aroused, and I hope action will follow.

Mr. Small: asked the Minister of Labour how many courses for engineering apprentices will be available at Government training centres in Scotland during 1961–62.

Mr. Hare: The present course at the Hillington Government Training Centre will be followed by two further courses in the autumn.

Mr. Small: Is the Minister aware that the number of apprentices attending these courses is surprisingly low and that six months ago they numbered eleven? Can he say whether the variety of courses and the status of this training for higher skills are adequate to attract the apprentices who are looking for skill of a higher kind?

Mr. Hare: The hon. Gentleman must remember what is the object of the courses. It is a limited one—to provide small and medium-sized firms with a demonstration of the benefits of systematic training.

Mr. Prentice: Is the right hon. Gentleman aware that there will be 45,000 extra school leavers in Scotland during the next three years? Against that background does he not think that this reply and the replies to the previous Questions on this subject are hopelessly inadequate? Should there not be Government effort on a much bigger scale and quicker action because the extra school leavers start leaving at the end of the summer?

Mr. Hare: The hon. Gentleman must be careful in what he says. The trade unions and the employers have agreed that this is a responsibility which is theirs and which they are going to undertake. To denigrate their efforts in the middle of all this is a great mistake. I cannot guarantee what the results will be, but from what I have heard I think the results will be much better than some Members opposite appear to think.

Mr. Ross: Surely the Minister will appreciate that the grant-in-aid which is made available in respect of training development officers was conditional upon employers and industry contributing the same amount and that there has been a very unsatisfactory response?

Mr. Hare: The hon. Gentleman should realise that a number of employers and employing organisations have done this on their own.

Disabled Persons, Cardiff

Mr. G. Thomas: asked the Minister of Labour the number of disabled persons registered as unemployed in Cardiff at the most convenient recent date; what progress has been made in reducing the number during the past year; and whether he will announce his plans for helping those disabled persons who have been registered for employment for over a year.

The Parliamentary Secretary to the Ministry of Labour (Mr. Peter Thomas): 401 on 20th March, compared with 503 in March, 1960. The disabled have benefited considerably from the steady improvement in the local employment situation during the past year, and my disablement resettlement officers will continue to do their best to find work for those remaining unemployed, including the 120 persons who have been unemployed for over a year.

Mr. Thomas: Whilst thanking the hon. Gentleman for the encouraging figures he has given, which indicate that there is a reduction, may I ask how long he expects it will be before he can reduce the length of unemployment of those who have been unemployed for over a year?

Mr. Thomas: No, I am afraid I could not give the hon. Member any guess as to how long that will be, but it is quite clear that the employment situation in Cardiff is getting better week by week. I am very optimistic about the opportunities for those people to get employment in future.

Mr. Callaghan: Is there any proposal to set up a new Remploy factory in the Cardiff area, because more than anything else that would help to solve this problem?

Mr. Thomas: No. there is no proposal to set up a new Remploy factory in the Cardiff area, but the question of an increase in the capitation grant for sheltered workshop employment is being actively considered at the moment.

Ship-Repairing Industry, Merseyside (Dispute)

Mrs. Braddock: asked the Minister of Labour what progress he has made towards settling the dispute on Merseyside in the ship-repairing industry, which has caused a stoppage for nearly two months; and whether he will make a statement.

Mr. Hare: My officers had discussions with representatives of the employers and the union on 29th March, but no mutually acceptable basis for a resumption of work could be found. The District Committee of the Confederation of Shipbuilding and Engineering Unions had an informal meeting with the Employers' Association on 13th April, but I am informed that no agreement was reached. My officers are keeping in close touch with the situation.

Mrs. Braddock: In view of the fact that this strike has been going on for so long and very little is known about it in the industrial field, except among those who are taking part in it, does the Minister not think that it has been a rather long time in which his Department has not taken steps to ensure that some negotiations take place on this matter? Is he aware of the difficulty that it is creating? Will the right hon. Gentleman look at the position? Is he aware that in Liverpool a number of men who are not taking part in the strike are unemployed as a result and have had their unemployment pay suspended, which has created great financial difficulties for them?

Mr. Hare: I agree with the hon. Lady. This strike, of course, has gone on for a very long time, but I assure her that my industrial relations officers have been in touch with the parties since the strike started. On a number of occasions they have offered to convene a joint meeting to try to get a basis for the resumption of work, but neither the employers nor the unions have at any time shown any desire for my intervention, and until there are signs of a change in this attitude I do not think that I can do much to help.

Sir H. Oakshott: Is my right hon. Friend aware that a large number of men who are in no way personally involved in


this dispute are out of work through absolutely no fault of their own and are denied unemployment benefit? Could he not see that justice is done to these people?

Mr. Hare: I will look at the difficulty. The strike has gone on for a very long time but, unfortunately, neither side has shown any sign of wishing me to intervene.

Mr. Lee: Could the right hon. Gentleman confirm that negotiating machinery has been exhausted long since in this dispute, and could he say whether he has approached the executives of the unions concerned to see whether arbitration or something of that sort would be acceptable?

Mr. Hare: I am in close touch and will do anything that can be helpful, but until there is a change of mind it is difficult to know what more we can do at this stage.

Building and Engineering (Accidents)

Dr. Stross: asked the Minister of Labour what were the numbers, respectively, of fatal and other reportable accidents in 1959 and 1960 at building operations and works of engineering construction.

ACCIDENTS REPORTED IN BUILDING OPERATIONS AND WORKS OF ENGINEERING CONSTRUCTION, 1959 AND 1960


Year
Building Operations
Works of Engineering Construction



Total Accidents
Fatal Accidents
Total Accidents
Fatal Accidents


1959
…
…
…
15,410
169
2,875
48


1960
…
…
…
16,934
217
3,650*
60*








(2,457)
(40)


* The definition of "work of engineering construction" was extended during 1960.


The figures in brackets show the number of accidents reported in 1960 which occurred at work within the scope of the Acts before the extension of the definition. These figures and not the total figures are comparable with the figures for 1959.

Factory Inspectorate

Dr. Stross: asked the Minister of Labour whether he will make a statement on the recent improvement in the pay structure of the Factory Inspectorate; and what improvement has occurred in the recruitment of inspectors arising from this.

Mr. Hare: In July, 1960, the pay of inspectors up to Class 1A was increased and I am circulating details in the OFFICIAL REPORT. Since then rates of

Mr. Hare: As the reply contains a number of figures, I am circulating particulars in the OFFICIAL REPORT.

Dr. Stross: Would it not be fair to suggest that there has been a deterioration as between those two years? If that is so, would the Minister give us some reassurance and say that he will do everything to get as many inspectors as possible appointed and as frequent inspections as possible made and see that those who do inspect shall be as highly trained as possible?

Mr. Hare: Certainly the hon. Member's assumption is right. I am glad that he has called attention to it. There has been a regrettable increase in the number of accidents. I also agree with him that everything should be done to make people more aware of the need for greater safety consciousness. Apart from this, I have increased the number of my Inspectorate; I am also taking power to issue further regulations, but the more that can be done on both sides of the House to draw attention to the need for greater care in avoiding accidents the better.

Following are the particulars:

pay of senior grades have also been increased. There has been a substantial increase in recruitment since July, 1960, but it is not possible to say how far this is due to the revised salary scales.

Dr. Stross: May I thank the right hon. Gentleman for that reply and assure him that there are many others on both sides of the House who welcome this increase? Will the right hon. Gentleman pay particular attention to the fact that not


only do we need a great increase in the number of inspectors, but an improvement in the qualifications they possess at the initial grade?

Mr. Hare: I will certainly take note of what the hon. Member says.

Mr. Prentice: While welcoming that reply, may I ask the right hon. Gentleman what further steps are being taken to increase the numbers of the Factory Inspectorate, since the rising rate of

IMPROVEMENTS IN SALARY SCALES OF H.M. INSPECTORS CLASSES 1A, 1B AND II


—
Old scale in operation at July, 1960
Revised scale and operative dates
Present scale from 1st January, 1961




£
£
£


H.M. Inspector Class 1A
…
1,380–1,950
1,475–2,200 from 1st October, 1958 (b)
1,534–2,288 (c)


H.M. Inspector Class 1B
…
1,135–1,550
1,200–1,690 from 1st October, 1958 (b)
1,248–1,758 (c)


H.M. Inspector Class II
…
650 (age 23)–1,035
730 (age23)–1,095 from 1st October, 1958 (b)
759 (age 23)–1,139 (c)

NOTES:
(a) The salary scales quoted are male national rates.
(b) Pay settlement announced on 18th July, 1960.
(c) Improvement consequent upon Central Pay Settlement for the Civil Service.

Professional Footballers (Agreement)

Mr. J. P. W. Mallalieu: asked the Minister of Labour if he will state the details of the agreement reached between the Football League and the Professional Footballers' Association under the auspices of his Department.

Mr. Hare: As the text of the agreement is long, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Mallalieu: Would the right hon. Gentleman kindly summarise that part of the agreement which deals with the retain and transfer system, and will he say whether at his Ministry a substantial modification of that system was agreed?

Mr. Hare: When the hon. Member sees the full text of the agreement, I think he will agree that probably three points are most important. Point (3) is that the player is to decide by 31st May whether or not to accept; Point (4) is that, if he does not accept, the club will retain and place him on the transfer list. Point (7), which I think is relevant, is that if by 31st August he is still not transferred, the Management Commit-

accidents in industry can be met to some extent by increasing the number of inspectors?

Mr. Hare: We should not place too much emphasis on numbers. I think that quality, as the hon. Member for Stoke-on-Trent, Central (Dr. Stross) suggested, is very important. I do not want to dilute the quality. We must watch both these factors at the present time.

Following is the information:

tee of the Football League will, on the application of the player, deal with the matter. Players also have the right to appeal to the Management Committee in connection with transfer fees.

Mr. C. Pannell: Will the right hon. Gentleman appreciate that in this matter his own good faith has been impugned, particularly by members of the Football League who suggested that Mr. Claro had what one can only call unilateral negotiations with the players? And as we who have taken part in these negotiations all know that these sort of charges are quite unwarranted, will the right hon. Gentleman deny them and say that his Department has acted as circumspectly in this matter of negotiations as it has always been its tradition to do?

Mr. Hare: My Department certainly acted in the traditional manner in this dispute, and I would not subscribe to any criticism of the way it carried out its duties.

The terms of the agreement are as follows:

(1) No transfers to take place during the term of the contract except by mutual consent of club and player.


(2) The player to be informed by the 19th May preceding the end of the contract of the club's offer for a new contract.
(3) The player to decide by 31st May whether or not to accept.
(4) If he does not accept the club will retain and place him on the transfer list.
(5) If he is not transferred by the 30th June the club may continue to retain him on payment of £15, £14, £13, £12, according to the Division, up to 31st July.
(6) If not transferred by 31st July the player will sign a playing contract for one month on the offered terms subject to the club maintaining efforts to transfer him.
(7) If by 31st August he is still not transferred, the Management Committee of the Football League will, on the application of the player, deal with the matter. The players also have their present right of appeal to the Management Committee in connection with transfer fees, etc., at any time.

Mr. J. P. W. Mallalieu: asked the Minister of Labour what was the nature of the recent representations made to him by the Professional Footballers' Association concerning the operation of the agreement made between them and the Football League under the auspices of his department; and what was his reply.

Mr. Hare: No representations were made to me. My Department arranged a meeting on 16th March at which the Professional Footballers' Association expressed the view that the amendments which the Football League proposed to make to their Regulations did not fully implement the agreement of 18th January. The points raised by the Association were placed before the Extraordinary General Meeting of the League on 14th April, but I understand that it was decided at that meeting not to change the present transfer system.

Mr. E. Fletcher: In view of the fact that some misunderstanding has obviously arisen between the Football League and the Professional Footballers' Association, will not the right hon. Gentleman see that his Department brings the parties together as soon as possible with a view to some sensible arrangement for the future being made?

Mr. Hare: I think that the sensible thing would be for the parties to set up as soon as possible a joint negotiating committee under an independent chairman at which the remaining differences between them could be discussed. I will certainly give assistance with such a

committee, but conciliation can be successful only when both parties are prepared to honour their agreements.

Mr. Mallalieu: May we take it that it is the Minister's view that the Football League has gone back on the agreement on which it gave an undertaking in the Ministry? If that is so, will the right hon. Gentleman make it very clear in future negotiations that industrial peace is impossible unless both sides can be trusted to keep their word?

Mr. Hare: I do not want to aggravate the situation. It is not for my Ministry to interpret an agreement between the two parties, but as far as I and my departmental officers are concerned, we have no doubt that the Professional Footballers' Association is right in its contention, and the Football League was informed of our views in a letter dated 4th April.

Mr. Lee: Is the right hon. Gentleman aware that the views he has just expressed are certainly the views held by my hon. Friends? Will he make it clear to the Football League that when the good offices of the Ministry of Labour are asked for we are entitled to expect that decisions arrived at there will be honoured by both sides, and that in an industry such as this, where the negotiating machinery is very young, it indeed strikes a mortal blow at confidence by the players if this kind of chicanery is to go on any more?

Mr. Hare: The feelings expressed by the hon. Gentleman are probably also shared by many of my hon. Friends. I do not want to say anything which will aggravate the situation, but what has been said in the House this afternoon makes it quite clear where we all stand in this matter.

Steel Industry (Accidents)

Mr. E. L. Mallalieu: asked the Minister of Labour if he is satisfied that adequate measures are being taken in the steel industry to reduce the rate of accidents, particularly amongst the younger workers, which reached a peak in the early part of last year.

Mr. Hare: This industry has been particularly active in its efforts to reduce accidents. Between 1956 and 1959 the accident frequency rate for all workers


fell by 27 per cent. and the rate for young people by 53 per cent. Unfortunately, these rates show increases in 1960 of 6 per cent. and 30 per cent., respectively. This was due in part to increasing activity and to the considerable influx of new workers, but it is a disappointing reversal of the steady improvement previously achieved. I am satisfied that the industry is intensifying its efforts to reduce the number of these accidents.

Wages

Mr. Shinwell: asked the Minister of Labour whether he will introduce legislation for a minimum wage policy to be enforceable by law.

Mr. Hare: Minimum wages are at present enforceable by law in agriculture and the industries where there are Wages Councils appointed under the Wages Councils Act. In other industries these matters are discussed by the joint negotiating body on which both sides are powerfully represented. I do not consider further legislation to enforce minimum wages is necessary or desirable.

Mr. Shinwell: Is the right hon. Gentleman aware that the proposal contained in the Question is taken bodily from a statement made by his right hon. Friend the Prime Minister in a book he wrote several years ago? Is he repudiating the proposal made by his right hon. Friend?

Mr. Hare: I think that the right hon. Gentleman will know that time passes on. I am sure that he would be the first to say that he does not believe today everything that he believed, say, twenty years ago.

Mr. Shinwell: While expressing no opinion about the right hon. Gentleman's observation of a personal character, may I ask him to be good enough to consult his right hon. Friend to see if he can persuade him to revert to his original idea?

Mr. Hare: I am sure that note will be taken of the right hon. Gentleman's request.

Northumberland and Durham

Mr. P. Williams: asked the Minister of Labour what is the present level of unemployment in Northumberland and

Durham; how this compares with 12 months ago; and how he expects the position to develop in the next 12 months.

Mr. P. Thomas: There were 26,197 unemployed at 13th March, 1961, compared with 34,803 a year earlier. The improvement should continue over the next year, especially as it is estimated that about 6,000 new jobs will accrue in that period.

Occupational Health Services

Mr. Prentice: asked the Minister of Labour if he will make a statement on the Government's policy towards the recent Recommendation No. 112 of the International Labour Organisation concerning occupational health services in places of employment.

Mr. Hare: I would refer the hon. Member to the White Paper, Cmnd. 1318, which was laid before the House on 23rd March.

Mr. Prentice: Will the hon. Gentleman acknowledge that the views which have often been expressed from this side of the House in favour of a comprehensive health service for industry are now supported by the recommendation of the I.L.O.? However, these ideas can be carried into effect only by a much more positive attitude on the part of the Government than that contained in the White Paper. Can he also tell the House, if he still relies on a voluntary approach, how long he thinks it will be before industry is effectively covered by occupational health services?

Mr. Hare: The hon. Gentleman will not expect me to agree with what he has said. I think that our present approach is the better one. The recommendation provides for the voluntary and progressive development of occupational health services. As he knows, a great deal is being done, and I hope that a great deal more will be done. I am quite convinced that we are on the right lines and are making the progress we need to make.

Youth Employment Service, Scotland

Mr. Willis: asked the Minister of Labour what steps are being taken to expand the Youth Employment Service in Edinburgh so as to deal adequately


with the extra numbers of school-leavers this year and in the next few years.

Mr. P. Thomas: The number of youth employment officers has increased by 3 or 50 per cent. since 1956. The future needs of the Service in the area are being kept under review.

Mr. Willis: Is the Parliamentary Secretary in fact doing anything now to meet the increasing demand for these services which is bound to arise during the next two years?

Mr. Thomas: The increase in the number of young people reaching the age of 15 in the area between 1956 and 1962 is 41 per cent., and the increase in the number of youth employment officers is 50 per cent.

Mr. Hector Hughes: asked the Minister of Labour what steps are being taken to expand the Youth Employment Services in Aberdeen City and County so as to deal adequately with the extra numbers of school-leavers during each of the next five years, including 1961.

Mr. P. Thomas: The number of youth employment officers in Aberdeen City has increased by 1 or 33 per cent. since 1956. In the County, where because of geographical difficulties the number of staff has for some time been generous in relation to the number of school-leavers, an additional part-time officer has been made available. The future needs of the service in the area are being kept under review.

Mr. Hughes: Does the Parliamentary Secretary realise that he has, apparently inadvertently but unfortunately, narrowed the meaning of the word "expansion", which refers not only to numbers but also to kind? In these scientific days when the future of Britain is in the hands of youth, what expansion is taking place in the kind of employment which is offered to these educated and scientific youths?

Mr. Thomas: The Question is about the expansion of the Youth Employment Services. We are responsible directly and indirectly for the numbers of youth employment officers. As I told the hon. and learned Gentleman, in Aberdeen City they have increased since 1956 by 33 per cent.

Dr. Dickson Mabon: asked the Minister of Labour what steps are being taken to expand the Youth Employment Service in Renfrewshire so as to deal with the extra numbers of school leavers this year and in the next few years.

Mr. P. Thomas: The number of youth employment officers has increased by 2, or 40 per cent., since 1956. The future needs of the Service in the area are being kept under review.

Dr. Mabon: Is there any intention of trying to link up the work of the Youth Employment Service with possible potential developments either in the graving dock or in the motor-car factory in other parts of the county?

Mr. Thomas: We consider that the number of youth employment officers in post at the moment is adequate to deal with all eventualities in the area.

Mr. Hannan: asked the Minister of Labour what steps are being taken to expand the Youth Employment Service in Glasgow so as to deal adequately with the extra numbers of school leavers this year and in the next few years.

Mr. P. Thomas: The Central Youth Employment Executive is at present in consultation with the education authority about the staffing of the Service. The intention of these talks is to ensure that the arrangements made will be fully adequate to deal with the additional number of school leavers.

Mr. Hannan: Is the hon. Gentleman aware that increased staff in Glasgow is now a matter of great urgency? Will he bear in mind that in its Report in 1958 the Sub-Committee of the Estimates Committee pointed out that there were no grounds for thinking that this was an extravagant system, and that it still had to face its greatest test? Will he give an assurance that he will render all assistance to Glasgow in its expansion of the Youth Employment Service?

Mr. Thomas: Yes, it is a matter for the local authority, and I hope that there will be some increase. But, as I have said, the matter is under active consideration at the moment.

Mr. Manuel: asked the Minister of Labour what steps are being taken to expand the Youth Employment Service


in Ayrshire so as to deal adequately with the extra numbers of school leavers this year and in the next few years.

Mr. P. Thomas: The number of youth employment officers has increased by 2, or 50 per cent. since 1956. The future needs of the Service in the area are being kept under review.

Mr. Manuel: Is not the Parliamentary Secretary by this time aware that this fiddling answer about increasing percentages of officers is quite inadequate to meet the situation we have in these areas in Scotland? Does he not think that in areas of prolonged unemployment he ought to streamline the procedure and form some kind of committee of representatives of employers, trade unionists and his own Department in order to see that proper apprenticeships are taken up in the various trades in the area, instead of fiddling about with this answer about greater percentages of officers?

Mr. Speaker: Order. Would those hon. Members who are not so situated as to be able to abstain from conversation be so kind as to conduct their conversations a little less loudly?

Mr. Thomas: I disagree entirely with the hon. Member that the numbers I have given are inadequate. The Question relates to the expansion of the Youth Employment Service. The increase in the number of children reaching 15 in the area about which he asks—Ayrshire—is 34 per cent. between 1956 and 1962. and the number of youth employment officers has been increased by 50 per cent. We consider that to be adequate.

Mr. Steele: asked the Minister of Labour what steps are being taken to expand the Youth Employment Service in Dunbartonshire so as to deal adequately with the extra numbers of school leavers this year and in the next few years.

Mr. P. Thomas: The Central Youth Employment Executive has made certain recommendations for increasing the number of advisory staff in the area. These are at present being considered by the authority.

Mr. Steele: I am extremely disappointed that, apparently, I do not have any percentage increase at all. Whilst,

in fact, the other parts of Scotland had inadequate facilities before the percentage increases, those he has mentioned are not adequate at all. In view of this, would it not be better for the hon. Gentleman to ask the Central Office of the Tory Party to advise the industrialists in Scotland to provide money to enable this job to be done, rather than for it to be provided by the Central Office of the Tory Party for propaganda for the Tory Party?

Mr. Thomas: An increase in the Youth Employment Service in Dunbartonshire is a matter for the local education authority, and I hope that the hon. Gentleman will persuade that authority to pay particular attention to the recommendations that have been made to it.

Miss Herbison: asked the Minister of Labour what steps are being taken to expand the Youth Employment Service in Lanarkshire so as to deal adequately with the extra numbers of school leavers this year and in the next few years.

Mr. P. Thomas: The Central Youth Employment Executive has recommended increases in staff to take account of the additional number of school leavers.

Miss Herbison: Surely the Minister ought to be able to say what these increases are. Is he aware that the figures which he has already given today, when he takes credit for a 50 per cent. increase which might represent one officer, show that he assumes that the original number was adequate for the job? Is he not aware that we on this side of the House are convinced that we have never had an adequate service, and that in an area like Lanarkshire where there is so much unemployment the youth employment officers have a very heavy burden indeed? Will he say what reports they are giving to him of the very black spots that are blacker than those in Lanarkshire?

Mr. Thomas: I will certainly agree with the hon. Lady that the service in Lanarkshire at present is understaffed. I am very glad that she has raised this question, and I hope that she will use her influence with the education authority to ensure that it accepts the proposals that the executive made to it.

Training of Supervisors (Committee)

Mr. John Page: asked the Minister of Labour what progress has been made with the establishment of a committee on the selection and training of supervisors in industry.

Mr. Hare: I have now appointed a committee which will hold its first meeting tomorrow, 18th April. The terms of reference are as follows:
To review the progress made since the publication in 1954 of the Report of the Committee of Inquiry on the Training of Supervisors and the problems which have been encountered in organising effective training schemes; to consider arrangements for the selection of supervisors and to examine whether there is a need for a central organisation to further the development of supervisory training.
The chairman will be an Undersecretary of my Department. I will circulate in the OFFICIAL REPORT the names of the members of the Committee.

Mr. Page: What does my right hon. Friend consider to be the main objectives of the Committee? Will he draw the Committee's attention to the fact that in some industries supervisors consistently receive less pay than those they are supposed to be supervising?

Mr. Hare: In answer to the first part of my hon. Friend's supplementary question, I have done this after consulting my National Joint Advisory Council. On this Council we are examining a number of problems affecting relations between management and employees. I personally believe that good supervision can help to improve relations on the shop floor. An up-to-date review will therefore be helpful to both sides of industry. As to the other question which my hon. Friend asked, employers will doubtless take note of what he said.

Mr. R. Carr: Will the Committee be able to consider the possible extension of the Ministry's facilities at Letchworth for training supervisors and whether the facilities could be made available to industry on a fee-paying basis?

Mr. Hare: I do not think there is any reason why the Committee, if it wishes, should not look at the point my hon. Friend has raised.

Mr. Lee: Is the right hon. Gentleman aware that in the past there has been pointed criticism about the very low pay which supervisors receive? Is it within the terms of reference of the Committee to recommend that supervisors should not be allowed to fall below a certain salary level?

Mr. Hare: I do not think that would be within the terms of reference of the Committee. On the other hand, publicity will be given to what the hon. Gentleman said as well as to what my hon. Friend said.

The membership of the Committee is as follows:

Chairman: Mr. D. C. Barnes, Ministry of Labour.
Mr. J. R. Armstrong, British Association for Commercial and Industrial Education.
Mr. D. B. Beynon, British Institute of Management.
Mr. M. F. Bird, Ministry of Education.
Mr. P. J. Casey, British Employers' Confederation.
Mr. R. Duncan, British Employers' Confederation.
Mr. C. D. Ellis, Institute of Personnel Management.
Dr. C. B. Frisby, Ph. D., National Institute of Industrial Psychology.
Mr. J. J. Henderson, Institute of Industrial Supervisors.
Mr. A. Moffat, Industrial Welfare Society.
Mr. A. M. Morgan, C.M.G., Ministry of Labour.
Mr. F. Pickford, Ministry of Labour.
Mr. R. D. V. Roberts, Nationalised Industries.
Mr. J. P. Stoneman, Federation of British Industries.
Miss M. Towy-Evans, O.B.E., Ministry of Labour.
Mr. D. Winnard, Trades Union Congress.
Secretary: Mr. J. H. Galbraith, Ministry of Labour.

Glasgow-Port Glasgow Area

Dr. Dickson Mabon: asked the Minister of Labour what was the average percentage of unemployment in the Greenock-Port Glasgow area in the years 1952 to 1955 inclusive; what was the figure in 1956 to 1959 inclusive; and what it was at the latest convenient date.

Mr. P. Thomas: The percentage rates for 1952 to 1955 were 8·4, 8·0, 6·1, and 5·1; for 1956 to 1959, 5·4, 6·1,7·7, and 8·0; and on 10th April, 7·0.

Dr. Mabon: Does the Minister realise that these figures, bad as they are, would


be worse if they were not masked by emigration from the towns? Does he realise that it would be easy for the present Minister to break the record of his predecessor, and that one thing that could be considered would be to make representations to the Board of Trade, along with many others, to try to expand the advance factory programme?

Mr. Thomas: I certainly agree with the hon. Member that this is one of the blackest unemployment spots in Scotland, and has been for many years. It has not shared in the general improvement in Scotland over the last twelve months. This is a development district, and we are doing all we can to stimulate industrial development there. There are 650 jobs in prospect locally and, in addition, work is expected to start in the next few months on the graving dock project which will provide 2,000 jobs during construction and 1,200 permanent jobs.

School Leavers, Scotland

Mr. Gourlay: asked the Minister of Labour what steps are being taken in Scotland to deal adequately with the extra numbers of school leavers this year and in the next few years.

Mr. P. Thomas: The Central Youth Employment Executive and local education authorities keep the staffing of the Youth Employment Service under close review in all areas in anticipation of increased work arising from the larger number of school-leavers. As a result, nineteen new posts have been created and filled since 1956. Other increases in strength are likely to be made soon, as a result of current consultations between the Executive and authorities.

Mr. Gourlay: While I recognise the attempt that the Minister is making to provide more staff to deal with school leavers, may I ask what attempt is being made to provide more employment for the school leaver? Is the Parliamentary Secretary aware, for example, that there are fewer people employed in Scotland today than there were five years ago, and that unemployment there is higher today than it was at that time? Is he aware that we in Scotland are completely dissatisfied with the ineffectiveness of the Local Employment Act to provide necessary employment for our young people? What does he intend to do about it?

Mr. Thomas: I will accept quite a lot of what the hon. Gentleman says, but there has been a considerable improvement in Scotland over the last year, and we certainly hope that the improvement will continue.

Motor Industry (Industrial Relations)

Mr. Lee: asked the Minister of Labour whether he will make a statement on the conclusions reached by the joint committee which has been considering industrial relations in the car industry.

Mr. Hare: The talks between the employers and trade unions on industrial relations in the motor industry are still proceeding and I am not yet, therefore, able to make a statement on the outcome.

Blyth

Mr. Milne: asked the Minister of Labour (1) if he will give figures showing the length of unemployment in the Blyth constituency at the latest available date for males, females, and persons under 18 years of age, male and female, respectively;
(2) what were the total figures of unemployment in the Blyth constituency at the latest available date and the comparable figures in 1959 and 1960.

Mr. P. Thomas: On 10th April, the number of unemployed in the Bedlington Station, Blyth, and Seaton Delaval Exchange areas totalled 722 compared with 633 in April, 1959 and 784 in April, 1960. I will circulate in the OFFICIAL REPORT a table giving the detailed analysis of unemployment by duration at 13th March, 1961.

Mr. Milne: Is the hon. Gentleman aware that these trends are rather alarming, and will he consult with his right hon. Friend the President of the Board of Trade with a view to seeing that jobs are directed into this area in order to improve the position?

Mr. Thomas: I assure the hon. Gentleman that my right hon. Friend the President of the Board of Trade is continuing to keep the matter well under review.

Mr. P. Williams: In order to keep the matter in perspective for the region as a whole, did he not give an answer earlier showing that unemploy-

NUMBER OF PERSONS REGISTERED AS WHOLLY UNEMPLOYED AT LOCAL OFFICES IN BEDLINGTON STATION, BLYTH AND SEATON DELAVAL AT 13TH MARCH, 1961


Length of unemployment
Men
Boys
Women
Girls
Total


Up to 2 weeks
…
…
61
2
29
11
103


Over 2 and up to 8 weeks
…
…
149
8
68
15
240


Over 8 and up to 26 weeks
…
…
120
17
37
15
189


Over 26 and up to 52 weeks
…
…
55
5
18
1
79


Over 52 weeks
…
…
64
—
18
1
83


TOTAL
…
…
449
32
170
43
694

Income Groups (Family Expenditure)

Mr. Leavey: asked the Minister of Labour when it is intended to collect and to publish statistical and other information to show the analysed expenditure of families of representative income groups, such as was covered by the last Household Expenditure Inquiry.

Mr. Hare: Information of this type has been collected by the small scale continuing Family Expenditure Survey which commenced in 1957. It is hoped to publish material in respect of the first three years of this Survey later this year.

Mr. Leavey: Can the right hon. Gentleman confirm that if the report is published it will be based on the same principles of collection so that the new report can be directly compared with the statistics in the last one?

Mr. Hare: Broadly, what the hon. Gentleman says is correct.

Teachers and Hospital Workers

Mr. Marquand: asked the Minister of Labour whether he will make, and publish for the guidance of local authorities, hospital boards and all others concerned, a survey of the present and prospective supply over the next 10 years of persons of both sexes qualified, after completion of training, for employment as teachers, nurses, physiotherapists, almoners, health visitors, social workers of various kinds and in other occupations requiring similar qualifications and training.

ment in the Northumberland and Durham area had fallen?

Mr. Thomas: Yes, that is so.

The following is the information:

Mr. P. Thomas: My right hon. Friend is consulting my right hon. Friends the Minister of Education and the Minister of Health and I will write to the hon. Member as soon as possible.

Mr. Marquand: Will the hon. Gentleman not agree that during wartime a manpower budget was a very valuable means of filling vacancies in scarce occupations of this type? Would not a manpower budget now be a more valuable contribution to the expansion of our social services than the Budget to which we are about to listen?

Mr. Thomas: The right hon. Gentleman will appreciate that consultation will have to take place between my right hon. Friends the Ministers of Education and of Health.

Training Development Officers

Mr. Prentice: asked the Minister of Labour how many posts for training development officers have now been created by the Industrial Training Council; how many officers are now employed; and in what parts of the country they are operating.

Mr. Hare: Twelve posts have been created and nine officers are now employed. A further officer will be taking up appointment on 1st May in Glasgow and a second on 1st August in Manchester.

Mr. Prentice: What impact does the Minister think that twelve training officers will have on a nation with 50 million people in time to make a difference to the extra number of school leavers in


the next three years? Is it not clear that a much bigger scale of effort is required?

Mr. Hare: The hon. Gentleman is ignoring the vast amount of extra effort which has been put into this campaign by both sides of industry. These are specialist training officers who are there to supplement what has already been done.

Army Recruitment

Mr. B. Harrison: asked the Minister of Labour what consultations he has had with the Minister of Defence concerning plans for obtaining the necessary personnel should the Army not reach a strength of 165,000 by 31st December, 1962.

Mr. Hare: My right hon. Friend and I are naturally in close consultation on this matter.

Mr. Harrison: May we take it that the plans that were referred to by the Minister of Defence in the debate on 28th February this year are well advanced?

Mr. Hare: All I can say is that the Government, of course, have plans in hand and are considering plans to deal with any situation which may arise. I hope that my hon. Friend will agree with me that this particular eventuality will not in fact arise.

Mr. Emrys Hughes: Will the Minister tell us a little more about these consultations? Is be aware that very many young men in this country do not want conscription in any form?

Mr. Hare: I note what the hon. Member says.

AGRICULTURE, FISHERIES AND FOOD

Camel (Import)

Sir B. Janner: asked, the Minister of Agriculture, Fisheries and Food what was the cost of preparing and presenting to Parliament the Order of March 9th 1961, authorising the landing in London of one Bactrian camel; for what purpose this camel was imported; and what special features it presented which prevented him from making a general standing order to cover the importation of this camel.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. W. M. F. Vane): The cost of the Order was approximately £14. The camel was imported for exhibition by the Dudley Zoo. There were no special features about this importation. The General Order, to which I referred in my reply to the hon. Member on 26th January, will I hope be laid before the end of the month. A number of legal difficulties had first to be overcome.

Sir B. Janner: I thank the Minister for at long last coming to the conclusion that he will help to balance the Budget by means of one standing order. Is he aware that a giraffe is to come in, or has just come in, at the cost of another £14?

Mr. Vane: Yes, Sir; I was aware of the giraffe. I hope that this will be the last camel and the last giraffe to come in under this procedure.

International Dairy Products Council

Mr. de Freitas: asked, the Minister of Agriculture, Fisheries and Food what reply he has made to the National Farmers' Union's proposal for an international dairy products council.

The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames): I have not yet replied to the National Farmers' Union's letter but hope to do so very shortly.

Mr. de Freitas: Does the Minister realise that such a council, with Governmental representation, could benefit both the consumer and the producer? Ought he not to do everything he can to help and not delay further a reply?

Mr. Soames: There are many things to consider. I shall do it as soon as possible and reply.

Barley

Mr. Prior: asked the Minister of Agriculture, Fisheries and Food what progress has been made in discussions on barley marketing; and if he will make a statement.

Mr. Soames: Good progress is being made in these discussions, and I hope to make a statement within the next few weeks.

Mr. Prior: Is my right hon. Friend aware that the orderly marketing of barley can come about only if the growers and the merchants co-operate more and that, if this happens, we could have a better price for our barley which would lower the subsidy on barley, a fact which would be very welcome to his right hon. and learned Friend this afternoon?

Mr. Soames: I hope that this new scheme will make a considerable contribution to the more orderly marketing of barley.

Horticulture (Improvement Schemes)

Mr. Prior: asked the Minister of Agriculture, Fisheries and Food if he will state the cost to the Exchequer of improvement schemes so far authorised under the Horticulture Act, 1960, and the average size of such schemes.

Mr. Vane: If all the proposals approved under the Horticulture Improvement Scheme by 28th February are satisfactorily completed, our estimate is that the amount payable in grant on them will be £583,000. The average cost of work covered by an approved application is £1,465.

Bread and Dairy Products (Distribution)

Mr. Shinwell: asked the Minister of Agriculture, Fisheries and Food whether he will introduce legislation for the creation of public utility undertakings of a non-profit character for the purpose of organising the distribution of milk, bread, butter and cheese and other articles of domestic use.

Mr. Soames: No, Sir. Foodstuffs are more economically distributed and consumers' needs best served by competitive private enterprise.

Mr. Shinwell: Does not the Minister recognise the language in the Question? Has he never read the erudite and constructive proposals of his right hon. Friend the Prime Minister? Will he consult his right hon. Friend in order to persuade the Government to adopt the proposals which the Prime Minister originally suggested?

Mr. Soames: My right hon. Friend the Prime Minister is, of course, well

aware of the Question put down by the right hon. Gentleman and what lies behind it, but the right hon. Gentleman would make a great mistake if he thought that by going into this sphere of activity he could find a way out of the difficulties which surround Clause 4.

Mr. Shinwell: Does the Minister realise that hitherto I have experienced no difficulties about Clause 4? Will he address himself to this very important question? If the proposal was good enough for the Prime Minister several years ago, why is it not good enough now?

Mr. Soames: It has been considered.

Seed Dressings

Sir J. Maitland: asked the Minister of Agriculture, Fisheries and Food if his attention has been further called to the increasingly deadly effects of some kinds of seed dressing on all types of bird life; if he will ask for an immediate interim report on this particular form of poisoning from his Research Study Group; and if he will now state the action he proposes to mitigate or prevent any further occurrence of the slaughter which has been evident this sowing season.

Mr. Soames: I am keeping closely in touch with the progress of the surveys, one of which we are doing ourselves, being carried out into the deaths of wild birds presumed to have been caused by certain seed dressings.
My Department, with the cooperation of manufacturers, merchants and farmers, has for some months been arranging widespread publicity to encourage care in the use of these dressings. All the interests concerned agree that this is the best way of reducing casualties. I have arranged for a meeting with all the interests to be convened after this spring in order to review the effect of this publicity campaign and the results of the surveys. In the meantime, I do not think it is necessary to call for any interim advice from the Research Study Group, whose report is expected this summer.

Sir J. Maitland: Does my right hon. Friend realise that, while he is still considering the matter, all the good done by


the Protection of Birds Act, 1954, introduced by my noble Friend the Member for Aberdeen, South (Lady Tweedsmuir) is being completely wasted in one season by the poison damage to bird life which is taking place? Will he take the matter rather more seriously and act more quickly than he has hitherto?

Mr. Soames: I assure my hon. Friend that my Department and I myself take this matter extremely seriously. We have called for evidence throughout the country, particularly from those areas where these dressings are used, and not until we have that evidence shall we be able to assess it.

Flood Prevention, Hull

Commander Pursey: asked the Minister of Agriculture, Fisheries and Food if he will state the extent of the recent flooding in Hull and the defects which caused the flooding; and what steps are to be taken to prevent further repetitions of flooding of industrial and residential premises.

Mr. Vane: I understand from the Hull and East Yorkshire River Board that flooding occurred in the Swan Street and Chapman Street areas by over-topping at wharves on the River Hull, and in the Nile Street and Hessle Road area through a breach in the Railway Dock. I understand also that the City Corporation has in hand a detailed survey of the whole frontage of the River Hull within the City's boundaries and is also taking up the question of the Railway Dock with the British Transport Commission. This flooding was the result of exceptional circumstances.

Commander Pursey: Is the Minister aware that hundreds of houses are flooded out regularly in Hull? Is it not high time that he took the necessary action to cause owners of defective wharves to build them up and prevent any further flooding.

Mr. Vane: It would be rash for any of us to think that we could plan work which would prevent any further flooding in any conditions. In the City of Hull, the City Corporation has special powers under its Private Act of 1925 and those powers, in addition to the powers of the river board, should be sufficient to meet all ordinary circumstances.

HOUSE OF COMMONS CATERING

Mrs. Hart: asked the hon. Member for Holland with Boston, as Chairman of the Kitchen Committee, how many of the catering staff have suffered a reduction in wages as a result of changes in staff arrangements about which they were not consulted; and how many are leaving as a consequence of the new arrangements.

Mrs. Slater: asked the hon. Member for Holland with Boston, as Chairman of the Kitchen Committee, why the recent changes of staff were made without adequate consultation with the persons concerned.

Sir Herbert Butcher: The recent rearrangement of staff duties which were minor in character affected only eight people. They were made for the purpose of endeavouring to improve the service given to Members and were made in the same way to similar rearrangements of duties which have been carried out on earlier, occasions. One worker will sustain a reduction of 5s. 6d. per week, whilst another will receive an increase of a similar amount. I regret that one worker decided to seek other employment before giving the new arrangements a fair trial.

Mrs. Hart: Is the hon. Gentleman aware that I am told that four members of the staff intend to leave as a result of these new arrangements, that no consultation with them took place, and that among those who feel aggrieved at their new working conditions are members of the staff who have worked in this building for as long as 15 years? Is it not very unsatisfactory that such drastic changes should take place without adequate consultation with the staff?

Sir H. Butcher: I cannot regard the changes involving eight people, which amounted really to no more than cross-posting, as being in any way drastic. As the hon. Lady is in touch with certain members of the staff, I hope that she will suggest that a proper approach is to the management through the staff representatives and that, above all, members of the staff affected will endeavour to give the new arrangements a fair trial.

Mr. Lee: Will the hon. Gentleman answer my hon. Friend's question? Was there any consultation?

Sir H. Butcher: It is extremely difficult to know where consultation begins and the duties of management end. I think that the proper steps were taken in this case by the manager, who is experienced, and what was done here exactly followed what was done on earlier occasions.

Mr. Blyton: Does the hon. Gentleman realise that if the staff were in a trade union and organised, the Kitchen Committee would not get away with half of what it is doing in the staffing of its services?

Sir H. Butcher: The Kitchen Committee is in precisely the same relation with its staff as other departments in this House. I think that I speak for all members of the Committee, which is entirely non-party, when I say that it has three duties: first, to provide a service to Members; secondly, to provide good working conditions for its staff; and, thirdly, to do it without imposing an undue burden on the taxpayer.

Miss Herbison: Surely the hon. Gentleman realises that this House ought to set an example to the rest of the country on good industrial relations. Is he not aware that some of the women who have been affected give the most devoted service to Members in this House and that it was only because they were pushed too far that they consulted hon. Members? I ask the hon. Gentleman

to examine this matter again and to see what steps he or his Committee can take to rectify the harm which has already been done.

Sir H. Butcher: I am sorry, but I cannot agree with the hon. Lady in any way. Some of the changes were made deliberately with a view to assisting those who found the long and extended hours difficult for them. The manager and I, and indeed all of us, are most eager to provide good working conditions for the staff, but I am bound to add that it is not particularly easy to run a department efficiently if at the moment anything is changed Questions arise in the House of Commons.

Mrs. Hart: Would not the hon. Gentleman agree that the essential point is, not whether the members of the staff have an opportunity to put their grievances to the manager, but that they should have a right to be consulted before drastic changes are made? Will he not ensure in future that consultation takes place before such drastic rearrangement?

Sir H. Butcher: I cannot accept that these changes are of a drastic character in any way. I do not regard the fact that people who are serving teas upstairs are invited to serve teas downstairs as a drastic change. Nor do I regard it as a matter which should be the subject of lengthy consultation.

Mrs. Hart: I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir GORDON TOUCHE in the Chair]

Orders of the Day — BUDGET STATEMENT

3.33 p.m.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): One of the elements in the ordeal of a Chancellor of the Exchequer, in presenting his first Budget, is the presence of those who have held his position before him. Today, like, I am sure, the whole Committee, I am delighted at the presence of one who presented his first Budget thirty-six years ago, namely, my right hon. Friend the Member for Woodford (Sir W. Churchill).

Hon. Members: Hear, hear.

Orders of the Day — EXCHEQUER OUT-TURN 1960–61

Mr. Lloyd: I begin with an account of the results to the Exchequer of the financial year 1960–61.
On the revenue side, the out-turn, at £5,934 million, was £46 million below the Budget estimate. Inland Revenue receipts were £3,212 million, £61 million below estimate. Customs and Excise duties, at £2,390 million, fell short of the estimate by £19 million. Motor duties yielded £126 million, £13 million more than the estimate. Other revenue at £206 million produced an extra £21 million, mainly from the sale of surplus stocks of raw materials and a special debt repayment by France.
Expenditure above-the-line came out in total at £5,787 million, or £111 million more than the estimate. Consolidated Fund services, at £798 million, showed an increase of £29 million, of which £21 million was for debt interest, reflecting the higher levels of interest rates during the year. Supply expenditure was £82 million above the estimate, at £4,989 million.
As a result of these changes on both sides of the account, the surplus above-the-line, at £147 million, was £157 million less than the estimate of £304 million. Below-the-line, receipts, at £428 million, were £4 million less than estimated, but payments at £969 million were £85 million lower, so that net

payments below-the-line at £541 million ware £81 million below the estimate.
Thus, the result commonly termed the overall deficit was £394 million, or £76 million more than my predecessor estimated.
The borrowing problem set by this overall deficit was substantially increased by the need to finance both the rise in the gold and foreign currency reserves and our other external transactions. Over the year our total requirement, after employing receipts from extra-budgetary funds, was £560 million. One hundred and fifteen million pounds of this came from the increase in the note circulation, £300 million was raised by borrowing from the public, and a further £145 million was provided by Treasury bills held by the Bank of England against the Special Deposits called from the banks.
I have been greatly encouraged by the achievement of the National Savings Movement, an achievement helped, I am certain, by the improvements introduced by my predecessor a year ago. Net receipts to the Exchequer from National Savings of all forms have amounted to £275 million during the year. This is the third year running in which we have had outstanding results from National Savings. During those three years the amount remaining invested, including accrued interest, has grown by almost £1,000 million, or 15 per cent. I am not yet so used to these large figures that I regard these results as a matter of course, and I should like to send to Lord Mackintosh, and through him to the whole National Savings Movement, my grateful thanks. [HON. MEMBERS: "Hear, hear. "] What is important is not only the total achieved, but the fact that the habit of saving is being taught.
The success of National Savings and a rise in holdings of Tax Reserve Certificates left me with practically no need to borrow on the market, that is, by Treasury bills and gilt-edged securities. At the same time, there was a revival of demand for gilt-edged securities. My predecessor last year regretted the fact that he was down on balance over gilt-edged; that is to say, more was paid out to investors than was borrowed from them. This year, there has been a distinct change. The figures for 1960 have been published and analysed in Part


Two of the Economic Survey. Those for the financial year 1960–61 will be published in July, but in the meantime—I can say this now—they will show that over the financial year as a whole we were able to make large sales of securities and bring about a substantial reduction in market Treasury bills.

Orders of the Day — PUBLIC EXPENDITURE

I shall be coming later to the detail of the Exchequer prospects for the new financial year. But I wish to say something now about the expenditure side of the account. One of the problems which has to be faced by the Committee is the continuing growth in public expenditure. Last year, my predecessor had to deal with an increase in the Estimates for Supply services over those of the preceding year of £322 million, or 7·2 per cent. This year, the Supply Estimates are £280 million, or 5·7 per cent. above what was provided for in last year's Financial Statement—and this after crediting the proceeds of £50 million this financial year from the increased health stamp and charges. The expansion is spread over the whole field with varying rates of increase. About one-third of the total increase of £280 million is caused by increased rates of pay.

Most people no longer hold the view imputed to the nineteenth century that all public expenditure is bad and all private expenditure good. Nowadays, all political parties are committed to a high and rising level of expenditure on education, public health, and numerous other public services. But although this is accepted, public expenditure must not be allowed to outrun the prospective growth of our resources. It should not take too much of our resources from other forms of economic activity where growth is most likely to come. We must, therefore, see that we get the priorities as nearly right as we can, both within the public sector and between the public and the private sectors.

This calls for new methods. We need increasingly to look at all public expenditure together instead of piecemeal, and to look at it for a period of years in relation to prospective resources. I have recently set in hand a study of the whole problem of public expenditure in relation to the prospective future growth of our resources for a period of five years ahead. If we look back for a decade,

it will be found that, for a time after 1951, total public expenditure—and in this I include the whole of the public sector, central and local government, above-and below-the-line, the National Insurance funds, and the capital expenditures of nationalised industries—rose more slowly than the gross national product. This was largely due to a reduction in the proportion taken by defence. But the process was reversed three years ago, and the share of our total product taken for public purposes is rising again, and rising appreciably. The object of carrying out the study which I have just mentioned is to see how we can best keep public expenditure in future years in proper relationship to the growth of our national product.

I am one of those who believe that there are savings to be made by so-called administrative economies. I believe that if those, at all levels, who are charged with the spending of public money would bring to the task the same prudence they apply to their own financial affairs, the results would be worth while. Mr. Gladstone has been laughed at for his devotion to cheeseparing and to candle ends when he dealt, a hundred years ago, with an expenditure of £69 million. Today, with an expenditure of over £5,000 million on Supply, I cannot believe that there is not a good deal to be saved by more frugal administration. But, of course, the big money is involved not in administration, but in the basic decisions of policy which are taken by the Government and by Parliament.

For these reasons I have, as Chancellor of the Exchequer, been glad of the increasing concern in the problems of public expenditure which, I know, is felt by my right hon. and hon. Friends behind me, but not, I think, by them alone. In this connection, I would draw particular attention to the work of the Plowden Committee, which has already provided my predecessor and myself with a number of valuable interim Reports. Later this year I will report to Parliament on the whole range of the Plowden Committee's work.

Orders of the Day — THE UNITED KINGDOM ECONOMY IN 1960–61

I now turn to the state of the economy during the past year.

Twelve months ago, my predecessor took certain steps designed to avert the danger that the expansionary forces in the economy could lead to overloading. The Budget itself made a small net increase in taxation, and measures were taken outside the Budget to restrain the growth of bank lending and of consumer credit.

These measures were intended primarily to restrain personal consumption, and they were successful in that aim. Purchases of cars and household durables fell away and this kept the total of consumer expenditure roughly constant during the course of 1960, although at a level 3½ per cent. above that of 1959. The limiting of spending on credit checked personal consumption without affecting the general level of personal incomes. Indeed, there was an unusually rapid rise in real personal income—about 5 per cent. over the course of the year. But there was also a rise in personal saving. In the last quarter of the year the proportion of personal income saved was running at about 9 per cent.
It was not part of Lord Amory's purpose to restrict the growth of investment. Accordingly, the restraining measures did not include any reduction of the initial or the investment allowances, and fixed investment continued to rise rapidly. In manufacturing industry, the rate of capital expenditure in the second half of 1960 was over 20 per cent. higher than twelve months before, and in distribution and the other service industries there was a rise of 8 per cent. Public investment, having risen fast in 1959, flattened out in 1960. As a whole fixed investment was running 8 per cent. higher in the second half of the year than the year before, and for the whole year 18½ per cent. of the gross national product went to fixed investment—that is, over £4,000 million. That is not a figure we should be complacent about, but, nevertheless, an encouraging increase.

As for the remaining elements of domestic demand, current spending of public authorities continued to rise rapidly and the rate of stock-building continued at a high level in the second half of the year. The net result of all these movements in the different elements of domestic demand was, on the one hand, a rather slow increase in the total,

but, on the other hand, a distinct change in composition with the share of investment rising and the share of consumption falling.

But there were other respects in which the issue was less favourable. Mainly owing to continuing high pressure on resources, the stability of prices which had been achieved in 1958 and 1959 came under strain. At the end of 1960, the index of retail prices was two points higher than it had been a year before. The underlying trend of costs has begun to rise appreciably. This, in turn, reflects the greater scale and faster tempo of the increases in wages and salaries. In contrast with the experience of the two-and-a-half years before mid-1960, the most recent wage round has provided increases going well beyond the rate of productivity increase, and the interval since the previous round has also been shortened. Such developments are bound to put pressure on costs and prices. We saw that happening in 1960.

Secondly, the index of industrial production flattened out from April of last year onwards after having risen about 10 per cent. in the previous twelve months. Thirdly, there was a large increase in imports associated with a higher rate of stock-building. To meet this import bill and to meet our other commitments we needed a substantial increase in exports but we did not get it. Partly responsible for this was the rather special situation in the United States where our sales, particularly of cars, fell off considerably. It is also true that the expansion of world trade in general considerably slackened last year. But even allowing for these factors our export performance was a disappointing one over the year as a whole.

The most serious consequence of these trends was their effect on our balance of payments. Hon. Members will have read the White Papers and will be aware that the estimate of the deficit on current account of over £340 million in 1960, is not statistically comparable with previous figures. For the reasons given in the Balance of Payments White Paper we have had to move to a new basis for computing the figures. The effect of this has been to increase the provisional estimate of the deficit on current account in 1960, with corresponding offsets in other parts of the account, including a reduction in the deficit on long-term capital.

But, on any basis of calculation, the balance of payments during 1960 was very unsatisfactory. The situation can, perhaps, best be judged by looking at the external monetary position—that is to say, the balance between our recorded short-term assets and liabilities. This deteriorated by £168 million in 1960; a figure comparable with a change for the worse of £119 million in 1959, if we ignore certain special transactions of an abnormal character in that year such as our further subscription to the International Monetary Fund.

I have already mentioned the rapid rise in imports and the disappointing course of exports. Net invisible earnings also fell. On the capital account United Kingdom aid to developing countries continued to grow and, in 1960, was at a rate nearly double that of three years previously. And private investment overseas was maintained at the high level of previous years.

Summing up, I would say on the good side that generally 1960 was a year of very full activity: a year of rapidly rising real personal income, of high saving and of rising investment. But the other side of the medal was the dangerously high pressure of demand on productive resources, the signs of a return of increasing costs and prices, the failure of our exports to increase sufficiently, and the consequent serious weakness in our balance of payments. It cannot be denied it was a year of widespread prosperity. Equally, it cannot be disputed that that prosperity did not rest on a sufficiently secure foundation.

Orders of the Day — ECONOMIC PROSPECT FOR 1961–62

It is against this background that I have to assess what should be the objectives of budgetary policy in 1961.

The first and obvious need is a marked improvement in our balance of payments. There is some prospect of a reduction in imports, especially as stocks of industrial materials are now at a high level. There is, unfortunately, little prospect of any improvement in the invisible account. Our commitments by way of grants to the Colonies and lending to underdeveloped and other countries are likely to continue to increase. It is clear that for the necessary improvements in our balance of

payments we must look mainly to the expansion of exports.

We expect the expansion of world trade to be resumed in the course of this year, and our export industries should find their opportunities improving. The President of the Board of Trade and I have, since last September, announced a number of measures designed to assist sales promotion overseas. We have also made a complete overhaul of the credit facilities available to our exporters. As a result a number of improvements have been made in the services offered by Export Credits Guarantee Department. Since last October we have been prepared to match foreign competition by guaranteeing suppliers' credits for longer periods than five years post-shipment, in cases where other Governments are offering similar facilities. We have also been prepared to give cover for the first five years where the credit given by the exporter is for a longer period still.

On 6th February the Bank of England announced special discounting arrangements to help the commercial banks to provide finance for exports. Last week the President of the Board of Trade announced three other major changes. The charges over almost the whole field for Export Credits Guarantee Department services have been reduced. In special cases there will now be a new facility for guaranteeing loans to overseas borrowers to finance exports of capital goods from this country, and small exporters are to be helped. These are important and far-reaching improvements.

Nevertheless, we have a long way to go in fostering the growth of our exports. We must ensure that opportunities are not lost because there is an overload of domestic demand on our productive resources. Nor can we afford to have our competitive power damaged by rising costs.

I will take this last point first. I have already described how, in the last twelve months, the danger of chronic cost inflation from which we suffered up to 1958 has reappeared. There is reason to fear that the cost-inflationary process will speed up further. That, I feel, is our principal menace at present, and one which it is impossible to exaggerate. Whether or not this danger develops will


depend not only on the policies of the Government, but also on decisions by leaders on both sides of industry with regard to wages, profit margins and prices.

Orders of the Day — DOMESTIC DEMAND

With regard to the prospects for domestic demand, I will begin with consumers' expenditure. Taking into account the likely movements of wages and salaries, and other kinds of income, and the trend of prices, we have reason to expect another large increase in real personal income this year. The effect of this on consumer expenditure will be increased by some addition to consumer credit following the relaxations of credit restrictions made during the winter. I therefore expect a marked rise in total consumer expenditure in 1961 as compared with the average spending in 1960. By the end of 1961 it might well be running at a rate about 3½ per cent. higher in real terms than at the end of 1960. By comparison with the experience of most past years that would be a substantial increase.

I also expect current purchases by public authorities to rise at a rate of about 3 per cent. in real terms. This is much the same rate of increase as we have had each year over the last few years, and reflects mainly the steady expansion of such public services as education, health, and so on.

Coming to investment, it looks as if the trend of expansion will continue. The business forecasts collected by the Board of Trade suggest that in the manufacturing sector the demand for fixed capital investment in 1961 is likely to be about 30 per cent. above what it was in 1960, and in distribution and service industries about 10 per cent. I expect some rise in the investment demand of the public sector and a rise, also, in the demand of new housebuilding taking public and private building together. Taking into account the present considerable pressure of demand on the building industry, the increase in fixed investment in real terms looks like being about 7 per cent. between the end of 1960 and the end of 1961.

With rising consumption, private and public, and rising investment, it is clear that, even allowing for the probable

reduction in the rate of stock-building, there will be strong expansionary forces working on home demand.

Orders of the Day — LONGER-TERM ISSUES

I have been talking about 1961–62, but it would be wrong to form a judgment about the coming year without taking into account some of the longer-term trends in the economy. It would be quite wrong to think that the solution to our problem lies simply in stimulating higher and higher investment. Nor can it be found by the Government giving priority to economic growth over the balance of payments and the maintenance of price stability. I have said in a previous speech that we have the capacity to raise our national production by at least 3 per cent. per annum over a period of years, but it is a condition for doing so that our exports should increase by a much larger percentage. The key to this double achievement is the strengthening of our competitive power.

It is wrong to think of more rapid growth and a healthy balance of payments as being, in the last resort, competing objectives. The problem before us is not whether we should sacrifice the balance of payments to achieve a faster economic growth, or alternatively accept economic stagnation in order to safeguard our external position. The question, to my mind, is whether our economy is sufficiently resilient and flexible to cope with the demand of the home market and the need for increase exports. The ordinary processes of political controversy make the public discussion of this sort of question often less objective than it might be. If the Government of the day say anything is good, they are accused of complacency. If they say anything is bad, they are accused of admitting the failure of their own policies, and whatever criticism the Opposition of the day may make, the Government always accuse them of irresponsibility. Trying, however, to be objective, I would answer my question along these lines.

It is true, of course, that we have to carry our world-wide political and economic responsibilities, which are relatively greater than those of almost any other country in the world, and that this has been a very serious constraint upon our freedom of manœuvre. But, after


making all allowances for this, there are things that are wrong in our approach to our economic problems. There is the danger that we try to do too much at the same time—a high and growing level of consumption, a large defence effort, expanding social services and high levels of investment in the public and private sectors—all the time knowing that we have to earn our living in the world by exports. Our productivity is held down by shortages of skilled labour.

I am not satisfied that in all cases the two sides of industry are tackling this problem with sufficient energy. There are too few scientists and technologists. There are features in our tax system which make for inadequate rewards for initiative and enterprise. Again, some of our industries are insufficiently accustomed to competition and insufficiently aware of the need for technical improvement if they are to hold their own with their overseas competitors. The reduction in tariffs, for which we are working, may have a beneficial effect in this respect. Labour relations, standards of management, techniques of selling, are, in some cases, below what is needed in the present day world. Certain industries are still, in my view, handicapped by restrictive practices which are completely out of date. There is much that is good about British industry, but there is quite a lot that is not good enough.

Orders of the Day — CONCLUSION

Bearing all this in mind, what should be the purposes of this year's Budget? The rise in personal consumption must be restrained, I would hope that as in 1960 increased saving would be an important part in this. Nevertheless, I am sure that the broad effect of the Budget must be counter-inflationary; there must be a larger surplus above-the-line than last year and a smaller overall deficit. All existing encouragements to investment must be maintained. Room must be left for increased exports. I must consider whether existing methods of regulating the economy can be improved upon. I must also consider whether any additional incentive to effort and initiative can be provided. Above all, in everything I do I must have in mind the maintenance of confidence in the £ sterling, both at home and abroad.

Orders of the Day — SIMPLIFICATION OF THE TAX SYSTEM

Before coming to my proposals, I want to say something about methods of raising revenue and methods of budgetary or fiscal control of the economy. First, the simplification of the tax system and of the Government's accounts.

I arrived at the Treasury with preconceived ideas, long held, and, of course, with undue optimism about the simpleness of simplification. I wanted to do three things, if it were possible. First, to have one system of direct taxation of the individual instead of two, Income Tax and Surtax, as at present. Secondly, I wanted to have one system of taxation of companies, instead of two, Income Tax and Profits Tax, as at present. Thirdly, I wanted to see whether it was possible to present the Government's accounts in a rather more easily understood form, particularly with regard to capital receipts and expenditures.

As to the amalgamation of Income Tax and Surtax, there are two factors to be taken into account—one unalterable and the other of great practical difficulty. In the very large number of cases where there is income from more than one source, it is impossible, under our progressive system—and I use this word in a mathematical sense—to avoid dealing with liability to tax in two stages, even if the calculations are made under the same system and the same set of rules. The standard rate of Income Tax can be taken by deduction from dividends and interest. Virtually the correct Income Tax liability can be taken under P.A.Y.E. from wages and salaries as they are earned.

Nevertheless, after the individual's total income for the year is known, there has to be another calculation in order to arrive at the tax due, and to make any adjustments which may be necessary in retrospect. Therefore, whatever the system, one cannot avoid two stages—one concurrent and the other in retrospect. That is inevitable if we are to continue a progressive system and deduction at source as we obviously must, and that seems to be unalterable.

There is the second matter—one of practical difficulty in the year of change. At present, Income Tax is deducted under P.A.Y.E. concurrently with the


earning of the income. Surtax is paid on the income of the year before. If the two systems are amalgamated so that the part which is now called Surtax is deducted concurrently, what would then happen to the Surtax due in arrear? Even if one was prepared to forgive it—a heavy burden on other taxpayers—it would be impossible to do so in a way which would be fair between one taxpayer and another; for example, the salary-earner and self-employed.

Therefore, if I were to amalgamate the two taxes, current deductions from salaries would be made to take account of the combined rates from now on, while next January the Surtax bill for last year would have to be met. It is unpleasant enough having to pay one lot of Surtax in a financial year. To ask for two lots from a considerable number of people would seem to gratify too much the naturally sadistic instincts of a Chancellor of the Exchequer.

I have tried to get round this difficulty which, I believe, is a very real one, but it has so far proved impossible. Therefore, I have come to the conclusion that the best thing to do is to work for the assimilation of the rules governing Income Tax and Surtax as far as practicable, and this year I hope to make a beginning in one respect in a way which I will describe later.

As for the idea of one system of taxation for companies instead of Income Tax and Profits Tax, I was confronted at once with the adverse recommendation of the majority of the Royal Commission. I read the relevant paragraphs of the Report carefully. I would not be deterred by the difficulty considerably stressed in the Report, that of the possibility that the companies tax might become lower than the standard rate of Income Tax. I would face any problems arising out of such a contingency if and when I thought that there was a chance of it happening in practice.

However, there are other difficulties. There would have to be a standard rate of tax for deduction from dividends. In that connection, I am told there would be great complication in the case of dividends paid by one company to another. These difficulties were referred to in the Report. They have not yet been resolved and, certainly, I should not wish

to be responsible for introducing a new system which, in practice, proved to be more complicated and to present greater difficulties than the present one. I am not quite satisfied, however, and I intend to have these difficulties examined further before the next Budget.

The third matter to which I referred a few moments ago was the form and presentation of the Government's accounts. This includes the Estimates and the Exchequer accounts as a whole; including the question of what items should be shown above the line and what below it. We can rightly commend what our forefathers did in the 1860s to reform the accounts of their day, but it is hardly surprising that, a hundred years later, the system they drew up should need modernisation. There is surely something rather confusing about a presentation which puts some capital receipts, including certain debt repayments, above the line. Without wanting to become too controversial, I personally would add to this category receipts from death duties. At the same time, we put below the line some items such as post-war credits which, from many points of view, are indistinguishable from other current payments. I am sure that we have to produce a less confusing presentation. I have set on foot in the Treasury a full review of this matter. It will take time; but I shall see that it is pressed forward.

But, meanwhile, we have made a start. Certain proposals for a radical simplification and modernisation of the Estimates have been put to the Public Accounts Committee and the Select Committee on Estimates. I hope that both Committees will welcome these proposals. I shall, of course, carefully consider any comments they may have to make. I should like to see next year's Civil Estimates presented in the new form.

So much for the tax structure and the form of the Government accounts.

Orders of the Day — ECONOMIC REGULATORS

I want now to say something about methods by which the Government can influence developments in the economy. There has been much complaint about the jerkiness of Government action in controlling the economy: what has been referred to as a policy of stop and start


I am certain myself that without any regulatory action by the Government the swings in the economy would have been much more violent. However, there has been much discussion this winter of the most appropriate methods and suggestions of the need for new ones. I therefore propose to spend a few moments examining the various possibilities. First, there are physical controls licensing and rationing systems. These are matters of some controversy. There is a deep difference of opinion between the two sides of this Committee. I am not going to argue their merits or demerits this afternoon.

Then there are monetary methods, the Bank Rate, the Special Deposits scheme, and the hire-purchase restrictions—all operated to make credit more or less expensive or more difficult to get or the reverse. These have their disadvantages. It is not always possible to arrange that the same level of Bank Rate suits us domestically and internationally. A high rate may be prudent at home if demand is too high, but it may attract at some cost to us short-term funds from overseas which are not really wanted. I would add, in parenthesis, that we certainly should not be worried when those funds go away again. It is the long-term trends that are important.

The effects of altering the hire-purchase regulations have proved to be both prompt and substantial: but they are heavily concentrated on a certain range of goods and bear severely on a few industries which complain—and with some justice—that they are bearing too much of the brunt of the corrective action that is needed.

Then there is regulation by means of the Budget. That should remain the chief instrument, but it is not always possible to arrange that conditions will remain precisely the same over the following twelve months. What was right at the beginning of the financial year may well need adapting later on.

I have, therefore, come to the conclusion that while not dispensing with any of these monetary methods, we do need further means of stimulating or restricting the economy, by measures which can be brought into operation quickly at any time of the year, and the effect of which will be reasonably rapid and widespread.

I have read with interest the various suggestions that have been made. One suggestion that has commanded some support is that we should have a general sales tax, which could then be varied by small amounts upwards or downwards. There are practical difficulties. It means a new revenue control on half a million or so retailers. Is food to be included? Are services as well as goods to be taxed? Either way there are considerable complications. Lord Amory, in his Budget speech of 1958, went into some detail in analysing the possible yield. He formed the view that a comprehensive sales tax charged at a very low rate, but yielding the same revenue as the present Purchase Tax, is something of a mirage. I agree with his view. What I have said also applies to a turnover tax.

Nevertheless, I do believe that new instruments are necessary. Accordingly, I have two proposals to make to the Committee both of which will be simple and will this year require no new administrative machinery. First, I propose that the Government should be empowered to direct by Statutory Instrument, at any time of the year, that either a special surcharge or a special rebate should be applied to all the main Customs and Excise revenue duties and to Purchase Tax.

The total yield at present from these duties is about £2,300 million on an expenditure of about £7,500 million, largely by private consumers. The proposed special adjustment will be expressed as a percentage to be added to or subtracted from the amounts otherwise payable—a simple arithmetical calculation of the same percentage, from the same date, for all charges under all the heads of revenue affected. The relationship between the taxes will be fixed by the House in the Finance Bill and that will be maintained.

The maximum change in either direction for which I seek authority will be 10 per cent. of the existing charges. As I say, that will be the maximum.

Mr. Hugh Gaitskell: Either way?

Mr. Lloyd: Yes, either way. It will, of course, be possible to make smaller changes, such as 2½ per cent. or 5 per cent. The effect of this proposal will be that I shall be able to stimulate or


restrain consumers' purchasing power by a maximum annual rate of over £200 million a year each way, giving a range for this new instrument of about £400 million in all.

Mr. Gaitskell: Does it cover everything, Excise Tax and Purchase Tax?

Mr. Lloyd: If the right hon. Gentleman will wait, I am just coming to that.
Drawbacks and other repayments will be similarly adjusted so that exports are not subject to surcharge. Administrative arrangements will be simplified to ensure the maximum flexibility and to avoid accounting complications.
Protective and anti-dumping duties, where quite different considerations apply and international obligations are involved, will be excluded; I shall also leave out the vehicle Excise duties and the television licence duty, since the administrative complications of including them would be too great. The other Excise licence duties will be excluded on de minimis grounds, except for the bookmakers' licence duty, where equity demands that it should be treated in the same way as the pool betting duty.
So, to answer the right hon. Gentleman the Leader of the Opposition, this will cover the tax on alcohol and tobacco, the tax on petrol, and the other mass of duties on consumer expenditure, with the exceptions to which I have referred.

Mr. Percy Collick: All of which means increased prices.

Mr. Lloyd: If the weapon is used by way of rebate, it means reduced prices.
Statutory Instruments made under this power, if it is granted, will be subject to confirmation by affirmative Resolution of the House of Commons, but, in addition, because this power is so new and, in my view, so important, I propose to make provision that Statutory Instruments made under it will expire on 31st August, 1962, unless, at the time of next year's Budget, the power to make such Orders is continued for a further period by a Ways and Means Resolution followed by a section in the Finance Act. In other words, it will be for the House each year to decide whether or not to give this power to the Chancellor of the day for the following year.

Mr. Harold Wilson: This is very important, and the House must understand it. Are we right in understanding that any Statutory Instrument of this kind would have to apply flat, right along the board, that there could not be a differential of, say, 10 per cent. in Purchase Tax, leaving the other duties the same, and that the 10 per cent. would cover the whole system of indirect taxation, with the exceptions which the right hon. and learned Gentleman mentioned?

Mr. Lloyd: The essence is that it should be the same percentage for all forms of taxation—at the same date, the same time and the same percentage.
My second proposal relates to a special surcharge on employers, analogous to a payroll tax. The use of such a measure as an economic regulator would have the added advantage that when we are faced with a situation of chronic shortage of labour it would act as an incentive to economy in the use of manpower and to investment in labour saving equipment. I propose to ask for power this year as a temporay expedient to collect such a surcharge, should it be needed, by attaching it to the employers' share of the National Insurance stamp.
This would mean that the liability upon employers would be in respect of the same employments as those covered by the liability to pay the National Insurance employers' contribution. It would, however, be an entirely new and separate element, the proceeds of which would be payable directly to the Exchequer. It will be subject to an upper limit of 4s. per employee per week. At this maximum amount the surcharge would withdraw from the economy about £200 million in a full year.
A Statutory Instrument made under this power will also be subject to confirmation by affirmative Resolution. The power to make such an Instrument, if granted, will expire at the end of the financial year.
I recognise that the method of collection with the National Insurance contribution presents difficulties, particularly the risk of confusion between this surcharge and the contribution. Any such confusion might undermine the very important contributory principle on which National Insurance is based. However, it is the only machinery


readily available, and if it should be necessary to utilise this economic regulator during the current financial year this machinery will be used. I will, however, continue to examine other methods of levying such a surcharge. Should Parliament be asked to grant this power again next year, I would put forward fresh proposals.
These two new fiscal powers, which could, of course, be used either together or separately, will, in my view, greatly improve the Government's ability to regulate the economy; we shall be much better able to act by quick and flexible fiscal means, in the interval between this and the next Budget, thus reducing during that period dependence on regulation by monetary and credit restrictions. I realise the importance and the novelty of what I am asking, but I believe that we must improve our capacity for reasonably speedy action between Budgets, and to be seen to be doing so.
I think that this is the moment for me to refresh myself in the traditional manner, before I turn to the Exchequer prospects for 1961–62. If there is any speculation as to what this liquid I am drinking is, I can say it has certain medicinal properties, and that, unlike the drink which my predecessor occasionally took, it does not depend upon any State subsidy. For every gallon that you drink, Sir Gordon, the revenue benefits to the tune of £10 10s.

Orders of the Day — EXCHEQUER PROSPECTS FOR 1961–62

I now turn to the Exchequer prospects for 1961–62. I will take expenditure first. I have put the cost of Consolidated Fund services at £815 million, an increase of £46 million over last year's estimate. £20 million of this represents the increased cost of servicing the National Debt; another £11 million is the increase in Northern Ireland's share of the revenue; the remaining £15 million is the settlement between the Exchequer and the Post Office Fund, under the new arrangements recently authorised by Parliament.

Total Supply expenditure has already been published in the Vote on Account and the Defence White Paper. The figure is £5,187 million, which, as I said earlier, is £280 million more than last year's Budget estimate, the increase on

defence amounting to £48 million and that on civil expenditure to £232 million.

Next, I come to the revenue which we may expect on existing rates of taxation. The coming year's receipts from Inland Revenue duties I put at £3,610 million, an increase over last year's outturn of £398 million. From Customs and Excise duties I expect to get £2,455 million, an increase of £65 million. Motor duties I put at £130 million, or £4 million above last year. Other revenue, at £245 million is expected to be £39 million more, after taking into account the special debt repayment from Germany which was announced at the end of last month. In total, I estimate the revenue at £6,440 million, or £506 million more than last year's out-turn.

Taking revenue and expenditure together, on the basis of existing taxation there would be a surplus above-the-line of £438 million, compared with last year's estimate of £304 million and the out-turn of £147 million.

The estimates for below-the-line payments and receipts have been fully explained in the new White Paper on the subject, so that I need not go through them in detail. I merely recall that net payments are expected to be £575 million, or £34 million more than last year's out-turn.

So the prospective overall deficit is £137 million, which compares with last year's estimate of £318 million and the out-turn of £394 million. I remind the Committee that £60 million of this difference is accounted for by the windfall of the German debt repayment in advance.

Orders of the Day — ALLOWANCES FOR NATIONAL INSURANCE CONTRIBUTIONS

I now come to my proposals. First, I propose some relief for the taxpayer in the matter of the tax allowance for National Insurance contributions. Last year, as the Committee will remember, my predecessor introduced a new flat-rate allowance of £15 for adult employees. This was designed to meet the new situation which would arise when the graduated National Insurance scheme came into force. The new allowance was to take effect from 6th April, 1961. Since last year's Finance Act, National Insurance contributions have been increased. I propose to raise the flat-rate allowance to £18 to take


account of the pension element in the increase.

The increase in women's contributions is less than men's, and taken by itself would not justify an increase in the allowance of more than £2. I do not propose, however, to make any differentiation. All adult employees—other than women who have opted not to pay flat-rate contributions—will get an increased allowance of £3. There will be appropriate increases for the other classes affected. These changes will cost £12 million this year and £15 million in a full year.

Next, I have three proposals to make affecting the taxation of overseas income of people resident in the United Kingdom.

Orders of the Day — FRUSTRATION

The first of these concerns a problem which arises when overseas countries give special tax reliefs to traders and others whose activities assist the development of their territory. If a United Kingdom company operating in an overseas territory becomes entitled to such relief, its overseas tax is reduced. But since our arrangements for the relief of double taxation provide for a credit against United Kingdom tax only for the overseas tax actually paid, the effect of this reduction in the overseas tax is to increase the United Kingdom tax. So, it is said, the overseas relief is frustrated.

Countries with which we negotiate double taxation agreements feel that we ought to be willing to include in the agreements some provision which would obviate this result. I think that there is substance in this and I propose, therefore, that the Finance Bill shall contain a Clause providing that, in respect of overseas tax reliefs designed to assist industrial or commercial development, double taxation agreements made with overseas Governments may include a provision under which credit may be given to a United Kingdom resident in respect of tax that is treated by the overseas Government as though it had been paid.

Orders of the Day — DOUBLE TAXATION RELIEF

There are two other matters affecting double taxation where the Royal Commission considered that some relief was

necessary and where I propose reforms. The first change deals with an anomaly which can arise because our basis of assessment for a new business differs from that of certain other countries. I therefore intend to provide that, whatever may be the basis of United Kingdom assessment on the income of a new overseas business in its opening years, as each year's profits are charged to tax, the corresponding year's overseas tax shall be credited against the bill. The second change will provide for extending unilateral relief to taxes corresponding to Income Tax and Profits Tax levied by provincial or State Governments or local authorities overseas. For those hon. Members with the stamina for further investigation of these complicated tax matters I would point out that I am dealing with paragraphs 744 and 701 of the Royal Commission's Final Report.

Orders of the Day — GERMAN COMPENSATION

During Finance Bill debates last year my predecessor was pressed from both sides of the Committee to concede tax relief in respect of certain payments, in the nature of income, that are made by the German Government as compensation to victims of Nazi persecution resident in this country. There is undoubtedly considerable sympathy for the recipients of these payments and I have decided to put forward a clause in the Finance Bill to authorise relief because of the very special circumstances of these cases. The cost is estimated at £¼ million this year. I also propose that the relief should be retrospective to the first assessments in 1956–57 and that may involve the repayment this year of an additional £¼ million of tax already paid.

Orders of the Day — INVESTMENT ALLOWANCE FOR SHIPPING

I have considered carefully suggestions put forward by the shipping industry for new tax reliefs, but I do not feel able to make proposals about them in this Budget. However, the General Council of British Shipping has suggested that it would be a help to shipping companies, in drawing up their future plans, to have a guarantee that the investment allowance will be retained at its present rate of 40 per cent. for a period of years. I can certainly state that I see no prospect of this special allowance for shipping being withdrawn or reduced during this Parliament.

Orders of the Day — STAMP DUTY—BILLS OF EXCHANGE

I come now to a proposal concerning Stamp Duty on bills of exchange. With certain exceptions, hills of exchange are at present liable to ad valorem duty. It has been represented to me that the complications in calculating this duty are an obstacle to trade, particularly the export trade. I have come to the conclusion that we ought to get rid of the ad valorem scale. I therefore propose to make bills of exchange subject to a fixed duty of 2d. like cheques. The cost will be about £1 million this year and £1½ million in a full year. I believe that this will be of some benefit, as I have said, to exporters.

Orders of the Day — PARSONAGE HOUSES

I have considered the various suggestions that have been put forward for giving tax relief to the clergy. For reasons that have commended themselves to all my predecessors who have had to consider this question I cannot accept proposals for the exemption of Easter offerings. I am, however, prepared to make a concession to which considerable importance is attached by the Churches Main Committee.

Under decisions of the courts, certain ministers of religion, who live rent free in houses provided by their churches or congregations, are regarded as "representative occupiers"; and this means that they are not liable to pay tax under Schedule A. Other clergymen, for example, the Church of England parson, are, in law, beneficial occupiers of their residences and, as such, are liable.

I do not think that this legalistic difference of treatment is justified by any real difference in the use of the minister's dwelling house. That was the view of the Royal Commission. I propose, therefore, to put forward a Clause in the Finance Bill to provide that where any minister of religion, by virtue of his office, lives in a house which belongs to him as incumbent, or is owned by or on behalf of his church, he shall be treated for tax purposes as though he were a representative occupier and not liable for Schedule A tax.

Orders of the Day — SCHEDULE E ASSESSMENTS

I propose to legislate to get rid of some minor anomalies that flow from the fact that a large proportion of wage and

salary earners, dealt with under P.A.Y.E. are never formally assessed. A taxpayer who happens not to have been assessed at the ordinary time can claim to be assessed for past years which had been treated as settled and by so doing, can get the benefit for those years of some new interpretation of the law. But others who, for any reason, were assessed in the ordinary course cannot reopen their liabilities. I propose to include a Clause which will prevent the reopening of what in substance were settled liabilities. I also intend to make it impossible in future to avoid tax by paying special remuneration and relating it to a year which is out of date for assessment, in other words, more than six years back. I do not think that that is an unreasonable proposition.

The existing law requires that formal Schedule E Income Tax assessments must be made in all oases where an employee is liable to Surtax. In many cases, owing to personal allowances, no Income Tax is payable. To make a formal assessment carrying no tax in these cases is a waste of time and staff. It is also confusing and irritating to the taxpayer. I propose, therefore, to repeal this requirement. It will, however, still be open to any taxpayer who wishes to have a formal assessment to require it.

Orders of the Day — MINOR ITEMS

There are certain other small items.

I propose that a limited tax relief shall be authorised for certain income arising to pensions funds set up in this country for employees who work overseas.

I propose to make a change with regard to the returns made by Industrial and Provident Societies. At present, they have to make returns of interest paid on loans—but not interest paid on shares—where the amount paid to a depositor exceeds £5. I propose that they shall be required to make returns where the combined amount of loan and share interest exceeds £15.

As I announced last November, I propose to increase by £20 the income limits for the dependent relative allowance in view of the higher National Insurance retirement pensions now payable.

Provision will also be made in the Finance Bill authorising payments into


and from the Consolidated Fund in respect of National Savings Stamps and gift tokens. This is a necessary consequence of the new financial relationship between the Post Office and the Exchequer.

For reasons which I have explained in a reply today to a Question by my hon. Friend the Member for Denbigh (Mr. Morgan), I am proposing to include in the Finance Bill provisions for the final redemption of the Ottoman Guaranteed Loan, 1855. I shall in due course move the Special Procedure and Money Resolutions which will be necessary for this purpose.

Finally, on the Customs and Excise side, there is a change in the provisions about pool betting duty so as to amend the definition of pool betting, and I shall be moving a special procedure Resolution to enable us to deal in the Finance Bill with certain proposals relating to pool betting duty which are at present under discussion with the Government of the Isle of Man.

Orders of the Day — BUSINESS EXPENSES

I want to say something about business expenses.

I have been exercised in my mind about the tax treatment of expense allowances and benefits in kind received by directors and other senior executives. The question of business entertaining is closely linked. A great many firms pursue a strict policy in these matters—and nothing that I am going to say applies to them. I also realise that, in the pursuit of exports, the entertaining of overseas customers is necessary.

I think, however, that there is something behind this strong feeling which undoubtedly exists that some so-called business entertaining goes further than purely business motives. This is an unhealthy feature both on business and social grounds. I ask those concerned most seriously to consider whether some curtailment in the extent and scale of entertainment can be achieved without affecting business efficiency. It is a matter very difficult to deal with by legislation, but I shall review this matter again next year and I do not reject altogether the possibility of legislative action then.

As to motor cars and other benefits in kind, the existing law provides, in the case

of directors and those employees who earn £2,000 or more, for a tax charge on an amount equal to the annual value of the private use. I have authorised the Inland Revenue to institute a change in practice under which the annual value of the use of a car will be taken as 12½ per cent., instead of 9 per cent., of the car's original cost; and the amount attributable to private use will be calculated accordingly.

I also propose to include in the Finance Bill a Clause limiting the capital allowances that may be granted in respect of ordinary motor cars used by business and professional people to the allowances appropriate to a maximum cost of £2,000 for each car. If business men want to use more expensive cars, I think Chat it is not unreasonable that they should carry the excess over £2,000 themselves and not pass part of it on to the Exchequer.

A word about administrative improvements. I intend that the present form which employers are required to return to the Revenue showing expense allowances and benefits in kind should be revised so as to provide the Revenue with more precise information initially. I do not believe that this will in the end add to work as it will save subsequent inquiries.

I intend to adopt the recommendations of the Royal Commission on what are known as home savings arising during business travel. I have decided that the reduction of the allowance made for expenses incurred on business travel should not normally be applied in future in respect of expenditure on accommodation and such ordinary items as food and drink. This relaxation will be welcomed, I know, by those who go abroad in search of export orders. It is a source of very great irritation.

This, of course, does not mean that private expenditure, for example on holidays, taken in the course of a business trip, will be allowed, and, obviously, inquiries will continue to be made to ensure that expenditure of this kind is not included. The Inland Revenue proposes for the first time to issue a leaflet setting out the rules it follows in dealing with expenses claims under the special provision applicable to directors and senior executives. This leaflet will cover the new rules applying to home savings.

The concessions I have announced will cost about £13½ million this year. They will reduce the surplus above the line to £424½ million. Having regard to the economic circumstances of which I have already spoken, I have decided that this surplus is not enough. I consider that I should provide for an above-the-line surplus of about £500 million, involving an overall deficit of under £100 million. I have, therefore, decided to raise an additional £80 million of tax. If this amount proves too little, I will be able to correct the position by the use of one or both of the regulators I have proposed. If it proves too much, I can use the first regulator to reduce Purchase Tax and the main Customs and Excise revenue duties.

Orders of the Day — TELEVISION ADVERTISEMENTS DUTY

First, I propose to look to expenditure on television advertising for a modest contribution to the Exchequer. I am, therefore, proposing a duty of 10 per cent. on the charges made by the television programme contractors for the insertion of advertisements in programmes broadcast on or after 1st May. Provision will be made to enable existing contracts to be amended to take account of the duty. I estimate the yield at £7 million this year and £8½ million in a full year.

Because of my minority report as a member of the Beveridge Committee on Broadcasting, I feel that I have a certain personal responsibility for the introduction of commercial television. If I may mix up my metaphor, I am sure that those concerned with the payment of the duty will not mind too much being bitten by the hand which originally fed them.

Orders of the Day — MOTOR VEHICLE DUTIES

Next, I have decided to turn to vehicle Excise duties, where the revenue has been very buoyant recently and where the rates have not been raised for some years.

I am now proposing an increase of 20 per cent., which will increase the licence on a private car to £15 a year. I think that it is right to apply similar increases to other types of vehicle, excluding only those like ambulances and invalid carriages which are at present exempt, and buses and coaches for

which special relief was given in 1959. The rates of licence duty on commercial vehicles of all sorts have remained substantially unchanged since 1933, and I am satisfied that a modest increase can be made without seriously harming any class of road user.

It is not possible to increase each of the many different rates of duty by exactly 20 per cent., since there has, for convenience, to be a certain amount of rounding up or down. The new scales, as they will affect nearly all vehicles, are set out in full in the Financial Statement, and broadly represent an increase of 20 per cent. overall. In no case does the increase exceed 25 per cent. and in very few cases, apart from buses which I have already mentioned, is it less than 18 per cent. To give a few examples, motor cycles not over 150 c.c. will go up from 17s. 6d. to £1, taxis and the lightest goods vehicles from £10 to £12, farm tractors from £2 to £2 10s., and so on.

Owing to the recently introduced system of continuous issue of licences, the changes which I have described will take effect from tomorrow. I estimate the additional yield at £25 million during the current financial year. At the same time, I am making a small change in the law relating to the carriage of certain appliances on farm tractors, in the interests of safety. I add by way of postscript that these increases will enable me to face with greater equanimity the steadily increasing burden of expenditure upon the roads.

Orders of the Day — HYDROCARBON OILS

My third proposal for obtaining extra revenue relates to the hydrocarbon oil duty. At present, all light oils, that is mainly petrol, are dutiable at 2s. 6d. per gallon. Heavy oils used as fuel in road vehicles pay the same rate as the petrol they displace; but with minor exceptions, chiefly lubricating oils, which have remained chargeable at 1d. a gallon, all other heavy oils have been free of duty since 1947. The duty on them of 1d. a gallon was then withdrawn, at a time of acute shortage of coal and when every inducement was being offered to get people to change from coal.

The same conditions do not exist today and I consider that for revenue


reasons heavy oils should now bear some duty. I propose, therefore, to reinstate the duty, at the rate of 2d. a gallon, on heavy oils at present free of duty, that is fuel oil, gas oil and kerosene. Oils at present chargeable at 1d. a gallon will in future pay 3d. a gallon.

Following the normal practice, duty will be charged on heavy oils delivered from bond. In addition, in order to secure uniform treatment of stocks and, at the same time, to maintain the revenue yield, provision is being made for the appropriate duty to be charged on heavy oils taken out of storage at un-bonded premises and on which the new duty has not been paid. This special arrangement will be applied at premises with a capacity of 200,000 gallons or more and in setting this limit I have in mind that bonding facilities will, in the ordinary course, be granted for such premises on application being made and subject to the usual conditions.

Heavy oils shipped as stores or bunkers in foreign-going ships will, of course, be freed from duty and, following the practice when heavy oils were previously liable to duty, oil used as fuel in coast-wise shipping will also be freed.

The new duty will operate as from six o'clock this evening. I estimate the yield at £48 million in the present financial year and £50 million in a full year.

These are my proposals for raising the £80 million to which I referred earlier. I have not, however, quite finished.

Orders of the Day — SURTAX

I have received many representations about the need to reduce the levels of direct taxation, particularly Surtax. Surtax begins at £2,000. This figure was fixed in 1920. I learn from many quarters, sometimes unexpected quarters, that the present scope and level of Surtax is a substantial disincentive to effort and initiative.

I do not, however, feel able to provide for any relief of direct taxation to take effect in the year 1961–62. That will be a disappointment to many. Of course, so far as Surtax is concerned, the amount due next January will be upon income already earned in the

past. It would be illogical to reduce what is already payable on past effort on the ground of giving an incentive to future effort.

Nevertheless, I consider that there is force in the arguments against the present level of Surtax. In the modern world, the work of the manager, the scientist, the technologist is of increasing importance, not only to himself but to the community. In other countries there are much higher rewards for individual effort and skill. Therefore, I want to do what I can to ensure that the present incidence of Surtax does not act as a disincentive to those who have positions of responsibility in our industries and elsewhere in our national life. Accordingly, I think it right to take action to modify, as far as earned incomes are concerned, the present rules. The changes I propose will be applicable to incomes earned—I repeat earned—during this new financial year and thereafter. In other words, the changes will affect what is payable on and after 1st January, 1963.

I propose two measures: First, the earned income allowance applicable to Income Tax—two-ninths up to £4,005 and one-ninth thereafter up to £9,945—will be deductible in computing income for Surtax purposes.

Secondly, the present position is that, leaving personal allowances aside, Surtax begins at £2,000. I propose, in effect, to lift this figure for earned income, again leaving personal allowances aside, to £4,000. Putting this change more precisely, but not more concisely, there will be a special allowance for Surtax purposes in respect of earned income, namely, a deduction of £2,000 or, if it is less, the excess of earned income, less the earned income relief, over £2,000.

Mr. Gerald Nabarro: Say that again.

Mr. Lloyd: My hon. Friend can read it. The effect of this together with my first proposal will be that Surtax will not be payable on earned income until it reaches £5,000 or more depending on personal allowances; for example, those given for children.

Mr. Nabarro: Jolly good.

Mr. Lloyd: These proposals will give no relief to incomes derived solely from


investment. They will give maximum relief to incomes wholly earned. But because Surtax is a tax on total income they will affect the total burden of tax on mixed incomes comprising some earnings and some income from investments. But the relief will only flow from and be related to the amount earned. So, again, there will be an incentive to increase earnings.
I would like to make one further point. I have received many representations from married women anxious to engage in professional or other employment, but who are deterred from doing so by the system of aggregation of income for Surtax purposes. I do not feel able, in this Finance Bill, to change the system, but the proposals I have just announced will go a long way to solving this problem for a great many people.
The cost of my proposals will be £58 million in 1962–63 and £83 million in a full year.

Mr. Collick: What about the people below the Surtax levels?

Orders of the Day — CAPITAL GAINS TAX

Mr. Lloyd: It has been suggested in some quarters that these remissions on Surtax should be accompanied by a capital gains tax. I have carefully examined this possibility. From a practical point of view, the complication of the legislation and the administrative machine required present difficulties. Also, the allowance for losses and the many exemptions which would, in my view, be required would reduce the proceeds to very much smaller proportions than publicly estimated. I am, therefore, not proposing a capital gains tax in my Budget.
Of course, individuals or firms, who make a business of seeking capital gains on the Stock Exchange or in property or other deals, are, in fact, trading and are liable to the full rates of Income Tax, Surtax or Profits Tax on the profits from such activities. This is the law. People who are genuinely investing come into a different category. On which side of the line particular cases fall is a matter not for me or the Board of Inland Revenue, but is a matter to be decided by independent Commissioners of Taxes and the courts. This aspect of the matter has been looked at by both Royal Commissions, that is to say, in 1920 and 1955.

I propose to look at it myself again during the coming year. But I am not at present satisfied that what is called a capital gains tax is worth while.

Orders of the Day — PROFITS TAX

Therefore, in the circumstances of today, I propose to cover by far the greater part of the cost of the Surtax remission by increasing the Profits Tax by 2½ per cent. with effect from 1st April, 1961.

Mr. Collick: Chickenfeed.

Mr. Lloyd: This is estimated to yield £1·5 million this year, £45 million in 1962–63 and £70 million in a full year. I believe that this switch of burden from the individual to companies will be generally approved.

Orders of the Day — CONCLUSION

In total, the proposals I have outlined for increasing taxation will bring in £68 million in the forthcoming year. The effect will be to give me a surplus above the line in 1961–62 of £506 million. This will be a substantial factor in moderating the growth of home demand to the extent necessary to make room for increased exports. It will also mean that in 1961–62 the overall deficit or, to put it another way, the borrowing requirement of the Budget will be reduced to £69 million. This amount is well within what I may reasonably expect to raise from National Savings and other forms of non-marketable debt, for example, Tax Reserve Certificates.

In other words, while we shall not lose sight of our longer term aim of lengthening the debt already in market hands, and shall have to deal with the stock which matures in February next, we shall not, if things go as we expect, be looking for new money from the gilt-edged market in 1961–62. This will give us additional room for manœuvre in our monetary policy from now on. Our firm intention to keep our financial house in order will be clearly demonstrated.

I believe that my proposals for the new economic regulators will very much improve the Government's capacity to adjust trends in the economy without violent movements. I believe that my proposals with regard to Surtax will have a dynamic effect upon the initiative and effort of individuals, including those


engaged in exporting, whose work is of vital importance to the community. They will mean that valuable resources of manpower will have more inducement to stay in this country. I readily acknowledge that there is still much to be done in the reorganisation of indirect taxation, and in the increasing of incentives throughout the economy. In this Budget I have tried to act where action was most urgently necessary.

1. Television advertisements duty

Motion made,
That on advertisements inserted for payment in television programmes broadcast from stations in Great Britain after the end of April, nineteen hundred and sixty-one, there shall be charged a duty of excise, to be paid by the person providing the programme; and (subject to adjustment under any provision which the Act giving effect to this Resolution may make for the adjustment of liabilities for revenue duties) the duty payable in respect of any insertion of an advertisement in such a programme shall be of an amount equal to one tenth of the amount or value of the consideration payable for the insertion to that person (inclusive of any amount allowed by him by way of agency discount or commission, but exclusive of any amount recoverable by him in respect of the duty).—[Mr. Lloyd.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Hydrocarbon Oils (reduction of rebate)

Motion made, and Question,
That for heavy oils delivered for home use after 6 o'clock in the evening of 17th April. 1961, the rate at which rebate of customs or excise duty is allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952, shall be reduced by 2d. a gallon.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

3. Hydrocarbon Oils (repayment of rebate)

Motion made, and Question,
That on hydrocarbon oils on which before 6 o'clock in the evening of 17th April, 1961 (in this Resolution referred to as "the relevant time") rebate of customs or excise duty has been allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952, and not been repaid, there shall be repaid 2d a gallon of the rebate allowed, if at or after the relevant time the oils are stored on a site where there is for hydrocarbon oils storage, whether in one ownership or occupation or not, of an aggregate capacity of 200,000 gallons or over (or of an aggregate capacity not shown to the satisfaction of the Commissioners of Customs and Excise, if they so require, to be less than 200,000 gallons); and the following provisions shall apply:

(a) except In so far as other provision is made for oils in or removed to bonded storage, rebate shall be repayable on the first removal of the oils after the relevant time from storage on such a site (or, if that happens before the passing of the Act giving effect to this Resolution, then on the passing of that Act), and shall be repaid by the person in whose possession the oils are immediately before the removal, but the amount paid shall be recoverable by him, where he is not the owner, from the person to whose order he held the oils immediately before the removal; and
(b) sites in common ownership or occupation (companies of which one controls the other, or which are under common control, being for this purpose regarded as one person) shall be treated as together constituting a single site if hydrocarbon oils can be delivered from one site to the other by pipe or if the sites are managed as a single unit.—[Mr. Lloyd.]

put and agreed to.

4. Surcharges or rebates in respect of revenue duties

Motion made, and Question,
That it is expedient to provide for bringing into operation and withdrawing increases or decreases, not exceeding ten per cent., of amounts due for certain customs and excise duties and purchase tax or (whenever duty or tax became due) for drawbacks or rebates thereof or allowances for goods chargeable thereto, and to make consequential provision as respects repayments and other matters, so, however, that this Resolution shall not authorise provision relating to part only of the field of operation of any one duty or rate of purchase tax.—[Mr. Lloyd.]

put and agreed to.

5. Pool betting duty (extension of definition of betting)

Motion made, and Question,
That for the purposes of the pool betting duty the making of payments for the chance of winning any money or money's worth shall be treated as bets if the payments are made on terms under which the payors have a power of selection which may (directly or indirectly) determine the winner, notwithstanding that the power is not exercised, if they would be so treated had the power been exercised; and this Resolution shall apply whenever a payment was made, but only where the winner is determined by reference to an event occurring after the twenty-eighth day of April, nineteen hundred and sixty-one.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

TABLE


NEW RATES OF VEHICLES EXCISE DUTY


PART I


RATES OF DUTY ON VEHICLES NOT EXCEEDING 8 CWT. IN WEIGHT UNLADEN CHARGEABLE UNDER SECTION 2 OF ACT OF 1949



Rate of Duty


Description of vehicle
Initial
Additional if used for drawing trailer or side-car



£
s.
d.
£
s.
d.


1.
Bicycles (other than bicycles which are electrically propelled) of which the cylinder capacity of the engine—









(a) does not exceed 150 cubic centimetres
1
0
0

12
0



(b) exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres
2
5
0

12
0



(c) exceeds 250 cubic centimetres
4
10
0
1
10
0


2.
Bicycles which are electrically propelled
1
0
0

12
0


3.
Tricycles neither constructed nor adapted for use nor used for the carriage of a driver or passenger
2
10
0
—


4.
Other tricycles
6
0
0
—


5.
Vehicles other than mowing machines, being vehicles with more than three wheels neither constructed nor adapted for use nor used for the carriage of a driver or passenger
3
15
0
—

6. Vehicles excise duty

Motion made, and Question put:—
That—in the case of licences taken out after the seventeenth day of April, nineteen hundred and sixty-one,—

(a) the rates of duty on licences (other than trade licences) for the descriptions of vehicles specified in Parts I to V of the following Table shall be substituted for the rates for such licences specified in the Vehicles (Excise) Act. 1949. and section eleven of the Finance Act, 1959 (hackney carriages other than tramcars);
(b) the annual rates (section ten of the Act of 1949) of duty for general trade licences shall be increased from twenty-five pounds to thirty pounds and from five pounds to six pounds, and for limited trade licences shall be increased from five pounds to six pounds and from one pound to one pound five shillings.

PART III


RATES OF DUTY ON TRACTORS, ETC., CHARGEABLE UNDER SECTION 4 OF ACT OF 1949



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Initial
Additional for each ton or part of a ton in excess of the weight in column 2





£
s.
d.
£
s.
d.


1.
Vehicles mentioned in section 4 (2) (a) of Act of 1949
—
—
2
10
0
—


2.
Vehicles mentioned in section 4 (2) (b) of Act of 1949
—
—
2
10
0
—


3.
Vehicles mentioned in section 4 (2) (c) of Act of 1949
—
—
2
10
0
—


4.
Vehicles mentioned in section 4 (2) (d) of Act of 1949
—
—
2
10
0
—


5
Vehicles mentioned in section 4 (2) (f) of Act of 1949, other than showmen's vehicles
—
2 tons
30
0
0
—


2 tons
4 tons
48
0
0
—


4 tons
6 tons
66
0
0
—


6 tons
7¼ tons
84
0
0
—


7¼ tons
8 tons
102
0
0
—


8 tons
—
102
0
0
18
0
0


6.
Vehicles mentioned in section 4 (2) (f) of Act of 1949, being showmen's vehicles.
—
7¼ tons
30
0
0
—


7¼ tons
8 tons
36
0
0
—


8 tons
10 tons
42
0
0
—


10 tons
—
42
0
0
6
0
0

Weight unladen of vehicle
Rate of Duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Initial
Additional for each ¼ ton or part of a ¼ ton in excess of the weight in column 2





£
s.
d.
£
s.
d.


2.
Goods vehicles which are propelled by steam or are constructed or adapted to use gas as fuel, other than farmers' goods vehicles, showmen's goods vehicles or local authorities' watering vehicles.
—
12 cwt.
12
0
0
—


12 cwt.
16 cwt.
15
0
0
—


16 cwt.
1 ton
18
0
0
—


1 ton
3 tons
18
0
0
3
0
0


3 tons
4 tons
42
0
0
4
10
0


4 tons
6 tons
60
0
0
6
0
0


6 tons
—
108
0
0
4
10
0


3.
Farmers' goods vehicles
—
12 cwt.
12
0
0
—


12 cwt.
1¼ tons
12
0
0

15
0


1¼ tons
2 tons
14
5
0

10
0


2 tons
2¼ tons
15
15
0

15
0


2½ tons
3¼ tons
17
5
0
1
0
0


3¼ tons
—
20
5
0

10
0


4.
Showmen's goods vehicles
—
12 cwt.
12
0
0
—


12 cwt.
16 cwt.
13
5
0
—


16 cwt.
1 ton
14
10
0
—


1 ton
1¼ tons
15
10
0
—


1¼ tons
—
15
10
0
1
5
0


5.
Local authorities' watering vehicles which are electrically propelled.
—
1¼ tons
7
0
0
—


1¼ tons
2 tons
7
0
0
3
0
0


2 tons
3 tons
16
0
0

15
0


3 tons
5 tons
19
0
0
1
0
0


5 tons
—
29
0
0
—


6.
Local authorities' watering vehicles which are not electrically propelled.
—
12 cwt.
12
0
0
—


12 cwt.
16 cwt.
15
0
0
—


16 cwt.
1 ton
18
0
0
—


1 ton
2 tons
18
0
0
3
0
0


2 tons
4 tons
30
0
0
2
0
0


4 tons
5 tons
46
0
0
1
10
0


5 tons
—
58
0
0
—


7.
Goods vehicles not included in any of the foregoing provisions.
—
12 cwt.
12
0
0
—


12 cwt.
16 cwt.
15
0
0





16 cwt.
1 ton
18
0
0





1 ton
3 tons
18
0
0
3
0
0


3 tons
4 tons
42
0
0
4
10
0


4 tons
—
60
0
0
6
0
0

PART V


RATES OF DUTY ON VEHICLES CHARGEABLE UNDER SECTION 6 OF ACT OF 1949


Description of Vehicle
Rate of Duty



£
s.
d.


1.
Electrically propelled vehicles
9
0
0


2.
Other vehicles—






(a) vehicles not exceeding six horse power, if registered under the Roads Act, 1920, for the first time before the first day of January, nineteen hundred and forty-seven
10
15
0



(b) vehicles exceeding six horse power but not exceeding seven horse power if registered as aforesaid
12
10
0



(c) vehicles not included in the foregoing sub-paragraphs
15
0
0


For the purposes of this Resolution weight, cylinder capacity, horse power and seating capacity are to be determined, and other expressions interpreted, in accordance with the Act of 1949.


And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

The Committee divided: Ayes 345, Noes 205.

Division No. 138.]
AYES
[5.4 p.m.


Agnew, Sir Peter
Cooper, A. E.
Gower, Raymond


Aitken, W. T.
Cooper-Key, Sir Neill
Grant, Rt. Hon. William


Allan, Robert (Paddington, S.)
Cordeaux, Lt.-Col. J. K.
Grant-Ferris, Wg Cdr. R.


Allason, James
Cordle, John
Green, Alan


Amery, Rt. Hon. Julian (Preston, N.)
Corfield, F. V.
Gresham Cooke, R.


Arbuthnot, John
Costain, A. P.
Grimston, Sir Robert


Ashton, Sir Hubert
Coulson, J. M.
Grosvenor, Lt.-Col. R. G.


Balniel, Lord
Courtney, Cdr. Anthony
Gurden, Harold


Barber, Anthony
Craddock, Sir Beresford
Hall, John (Wycombe)


Barlow, Sir John
Critchley, Julian
Hamilton, Michael (Wellingborough)


Batsford, Brian
Crosthwaite-Eyre, Col. O, E.
Hare, Rt. Hon. John


Baxter, Sir Beverley (Southgate)
Crowder, F. P.
Harris, Frederic (Croydon, N. W.)


Beamish, Col. Sir Tufton
Cunningham, Knox
Harris, Reader (Heston)


Bell, Ronald
Curran, Charles
Harrison, Brian (Maldon)


Bennett, F. M. (Torquay)
Dalkeith, Earl of
Harvey, Sir Arthur vere (Macclesf'd)


Bernnett, Dr. Reginald (Gos &amp; Fhm)
Dance, James
Harvey, John (Walthamstow, E.)


Berkeley, Humphry
d'Avigdor-Goldsmid, Sir Henry
Harvie Anderson, Miss


Bidgood, John C.
Deedes, W. F.
Hastings, Stephen


Biggs-Davison, John
Digby, Simon Wingfield
Hay, John


Birch, Rt. Hon. Nigel
Donaldson, Cmdr. C. E. M.
Heald, Rt. Hon. Sir Lionel


Bishop, F. P.
Doughty, Charles
Heath, Rt. Hon. Edward


Black, Sir Cyril
Drayson, G. B.
Henderson, John (Cathcart)


Bossom, Clive
du Cann, Edward
Henderson-Stewart, Sir James


Bourne-Arton, A
Duncan, Sir James
Hendry, Forbes


Box, Donald
Duthie, Sir William
Hicks Beach. Maj. W.


Boyd-Carpenter, Rt. Hon. John
Eccles, Rt. Hon. Sir David
Hiley. Joseph


Boyle, Sir Edward
Eden, John
Hill, Dr. Rt. Hon. Charles (Luton)


Braine, Bernard
Elliot, Capt. Walter (Carshalton)
Hill, Mrs. Eveline (Wythenshawe)


Brewis, John
Elliott, R. W. (Nwcstle-upon-Tyne, N.)
Hill, J. E. B. (S. Norfolk)


Bromley-Davenport, Lt.-Col. SirWalter
Emery, Peter
Hinchingbrooke, Viscount


Brooke, Rt. Hon. Henry
Emmet, Hon. Mrs. Evelyn
Hirst, Geoffrey


Brooman-White, R.
Errington, Sir Eric
Hobson, John


Browne, Percy (Torrington)
Erroll, Rt. Hon. F. J.
Hocking, Philip N.


Bryan, Paul
Farey-Jones, F. W.
Holland, Philip


Buck, Antony
Farr, John
Hollingworth, John


Bullard, Denys
Fell, Anthony
Hope, Rt. Hon. Lord John


Bullus, Wing Commander Eric
Finlay, Graeme
Hopkins, Alan


Burden, F. A.
Fisher, Nigel
Hornby, R. P.


Butcher, Sir Herbert
Fletcher-Cooke, Charles
Hornsby-Smith, Rt. Hon. Patricia


Butler, Rt. Hn. R. A. (Saffron Walden)
Forrest, George
Howard, Hon. G. R. (St. Ives)


Campbell, Sir David (Belfast, S.)
Foster, John
Howard, John (Southampton, Test)


Campbell, Gordon (Moray &amp; Nairn)
Fraser, Hn. Hugh (Stafford &amp; Stone)



Carr, Compton (Barons Court)
Fraser, Ian (Plymouth, Sutton)
Hughes Hallett, Vice-Admiral John


Carr, Robert (Mitcham)
Freeth, Denzil
Hughes-Young, Michael


Cary, Sir Robert
Galbraith, Hon. T. G. D.
Hulbert, Sir Norman


Channon, H. P. G.
Gammans, Lady
Hurd, Sir Anthony


Chataway, Christopher
Gardner, Edward,
Hutchison, Michael Clare


Chichester-Clark, R.
George, J. C. (Pollok)
Iremonger, T. L.


Churchill, Rt. Hon. Sir Winston
Gibson-Watt, David
Irvine, Bryant Godman (Rye).


Clark, Henry (Antrim, N.)
Gover, Sir Douglas
Jackson, John


Clark, William (Nottingham, S.)
Glyn, Dr. Alan (Clapham)
James, David


Clarke, Brig. Terence (Portsmth, W.)
Glyn, Sir Richard (Dorset, N.)
Jenkins, Robert (Dulwich)


Cleaver, Leonard
Godber, J. B.
Jennings, J. C.


Cole, Norman
Goodhart, Philip
Johnson, Dr. Donald (Carlisle)


Collard, Richard
Good hew, Victor
Johnson, Eric (Blackley)


Cooke, Robert
Gough, Frederick
Johnson Smith, Geoffrey







Jones, Rt. Hn. Aubrey (Hall Green)
Morgan, William
Smyth, Brig. Sir John (Norwood)


Joseph, Sir Keith
Morrison, John
Soamee, Rt. Hon. Christopher


Kaberry, Sir Donald
Mott-Radclyffe, Sir Charles
Spearman, Sir Alexander


Kerans, Cdr. J. S.
Nabarro, Gerald
Speir, Rupert


Kerby, Capt. Henry
Neave, Airey
Stanley, Hon. Richard


Kerr, Sir Hamilton
Nicholls, Sir Harmar
Stevens, Geoffrey


Kershaw, Anthony
Noble, Michael
Steward, Harold (Stockport, S.)


Kimball, Marcus
Nugent, Sir Richard
Stodart, J. A.


Kirk, Peter
Oakshott, Sir Hendrie
Stoddart-Scott, Col. Sir Malcolm


Kitson, Timothy
Ormsby Gore, Rt. Hon. D,
Storey, Sir Samuel


Lagden, Godfrey
Orr, Capt. L. P. S.
Studholme, Sir Henry


Langford-Holt. J.
Orr-Ewing, C. Ian
Summers, Sir Spencer (Aylesbury)


Leather, E. H. C.
Osborn, John (Hallam)
Sumner, Donald (Orpington)


Leavey, J. A.
Page, John (Harrow, West)
Talbot, John E.


Leburn, Gilmour
Page, Graham (Crosby)
Tapsell, Peter


Legge-Bourke, Sir Harry
Pannell, Norman (Kirkdale)
Taylor, Sir Charles (Eastbourne)


Lewis, Kenneth (Rutland)
Partridge, E.
Taylor, Edwin (Bolton, E.)


Lilley, F. J. P.
Pearson, Frank (Clitheroe)
Taylor, W. J. (Bradford, N.)


Lindsay, Martin
Peel, John
Teeling, William


Linstead, Sir Hugh
Percival, Ian
Temple, John M.


Litchfield, Capt. John
Peyton, John
Thatcher, Mrs. Margaret


Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Pickthom, Sir Kenneth
Thomas, Leslie (Canterbury)


Lloyd, Rt. Hon. Selwyn (Wirral)
Pike, Miss Mervyn
Thomas, Peter (Conway)


Longbottom, Charles
Pilkington, Sir Richard
Thompson, Kenneth (Walton)


Longden, Gilbert
Pitman, I. J.
Thompson, Richard (Croydon, S.)


Loveys, Walter H.
Pitt, Miss Edith
Thorneycroft, Rt. Hon. Peter


Low, Rt. Hon. Sir Toby
Pott, Percivall
Thornton-Kemsley, Sir Colin


Lucas, Sir Jocelyn
Powell, Rt. Hon. J. Enoch
Tiley, Arthur (Bradford, W.)


Lucas-Tooth, Sir Hugh
Price, David (Eastleigh)
Tilney, John (Wavertree)


McAdden, Stephen
Price, H. A. (Lewisham, W.)
Turner, Colin


MacArthur, Ian
Prior, J. M. L.
Turton, Rt. Hon. R. H.


McLaren, Martin
Prior-Palmar, Brig, Sir Otho
Tweedsmuir, Lady


McLaughlin, Mrs. Patricia
Profumo, Rt. Hon. John
Van Straubenzee, W. R


Maclay, Rt. Hon. John
Proudfoot, Wilferd
Vane, W. M. F.


Maclean, SirFitzroy (Bute&amp;N. Ayrs.)
Pym, Francis
Vickers, Miss John


McLean, Neil (Inverness)
Ramsden, James
Vosper, Rt. Hon. Dennis


Macleod, Rt. Hn. Iain (Enfield, W.)
Rawlinson, Peter
Wakefield, Sir Wavell (St M'lebone)


MacLeod, John (Ross &amp; Cromarty)
Redmayne, Rt. Hon. Martin



McMaster, Stanley R.
Rees, Hugh
Walder, David


Macmillan. Rt. Hn. Harold (Bromley)
Rees-Davies, W. R.
Walker, Peter


Macmillan, Maurice (Halifax)
Renton, David
Ward, Dame Irene


Macpherson, Niall (Dumfries)
Ridley, Hon. Nicholas
Watkinson, Rt. Hon. Harold


Maddan, Martin
Ridsdale, Julian
Watts, James


Maginnis, John E.
Rippon, Geoffrey
Webster, David


Maitland, Sir John
Roberts, Sir Peter (Heeley)
Wells, John (Maidstone)


Manningham-Buller, Rt. Hn. Sir R.
Robertson, Sir David
Whitelaw, William


Markham, Major Sir Frank
Robinson, Sir Roland (Blackpool, S)
Williams, Dudley (Exeter)


Marlowe, Anthony
Robson Brown, Sir William
Williams, Paul (Sunderland, S.)


Marples, Rt. Hon. Ernest
Rodgers, John (Sevenoaks)
Wills, Sir Gerald (Bridgwater)


Marshall, Douglas
Roots, William
Wilson, Geoffrey (Truro)


Marten, Neil
Ropner, Col. Sir Leonard
Wise, A. R.


Mathew, Robert (Honiton)
Royle, Anthony (Richmond, Surrey)
Wolrige-Gordon, Patrick


Matthews, Gordon (Meriden)
Russell, Ronald
Woodhouse, C. M.


Maudling, Rt. Hon. Reginald
Sandys, Rt. Hon. Duncan
Woodnutt, Mark


Mawby, Ray
Scott-Hopkins, James
Woollam, John


Maxwell-Hyslop, R. J.
Seymour, Leslie
Worsley, Marcus


Maydon, Lt.-Cmdr. S. L. C.
Sharpies, Richard
Yates, William (The Wrekin)


Mills, Stratton
Shaw, M.



Montgomery, Fergus
Simon, Rt. Hon. Sir Jocelyn
TELLERS FOR THE AYES:


Moore, Sir Thomas (Ayr)
Skeet, T. H. H.
Colonel J. H. Harrison and


More, Jasper (Ludlow)
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
Mr. Edward Wakefield.




NOES


Abse, Leo
Callaghan, James
Edwards, Robert (Bilston)


Ainsley, William
Castle, Mrs. Barbara
Edwards, Walter (Stepney)


Allaun, Frank (Salford, E.)
Chapman, Donald
Evans, Albert


Awbery, Stan
Chetwynd, George
Fernyhough, E.


Bacon, Miss Alice
Cliffe, Michael
Finch, Harold


Baxter, William (Stirlingshire, W.)
Collick, Percy
Fitch, Alan


Benson, Sir George
Corbet, Mrs. Freda
Fletcher, Eric


Blackburn, F.
Craddook, George (Bradford, S.)
Foot, Michael (Ebbw Vale)


Blyton, William
Crossman, R. H. S.
Forman, J. C.


Boardman, H.
Cullen, Mrs. Alice
Fraser, Thomas (Hamilton)


Bowden, Herbert W. (Leics, S. W.)
Darling, George
Gaitskell, Rt, Hon. Hugh


Bowen, Roderic (Cardigan)
Davies, G. Elfed (Rhondda, E.)
Galpern, Sir Myer


Bowles, Frank
Davies, Ifor (Gower)
Ginsburg, David


Boyden, James
Deer, George
Gooch, E. G.


Braddock, Mrs. E. M.
de Freitas, Geoffrey
Cordon Walker, Rt. Hon. P.C.


Brookway, A. Fenner
Diamond, John
Gourlay, Harry


Broughton, Dr. A. D. D.
Dodds, Norman
Greenwood, Anthony


Brown, Alan (Tottenham)
Donnelly, Desmond
Grey, Charles


Brown, Rt. Hon. George (Belper)
Driberg, Tom
Griffiths, David (Rother Valley)


Butler, Herbert (Hackney, C.)
Dugdale, Rt. Hon. John
Griffiths, Rt. Hon. James (Lianelly)


Butler, Mrs. Joyce (Wood Green)
Ede, Rt. Hon. C.
Griffiths, W. (Exchange)







Grimond, J.
Mallalieu, E. L. (Brigg)
Skeffington, Arthur


Gunter, Ray
Mallalleu, J. P. W. (Huddersfield. E.)
Slater, Joseph (Sedgefield)


Hale, Leslie (Oldham, W.)
Manuel, A. C.
Small, William


Hall, Rt. Hn. Glenvil (Colne Valley)
Mapp, Charles
Smith, Ellis (Stoke, S.)


Hannan, William
Marquand, Rt. Hon. H. A.
Snow, Julian


Hart, Mrs. Judith
Marsh, Richard
Sorensen, R. W.


Hayman, F. H.
Mason, Roy
Spriggs, Leslie


Healey, Denis
Mayhew, Christopher
Steele, Thomas


Henderson, Rt. Hn. Arthur (RwlyRegis)
Mellish, R. J.
Stewart, Michael (Fulham)


Herbison, Miss Margaret
Mendelson, J. J.
Stones, William


Hewitson, Capt. M.
Millan, Bruce
Strauss, Rt. Hn. G. R. (Vauxhall)


Hill, J. (Midlothian)
Milne, Edward J.
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Hilton, A. V.
Mitchison, G. R.
Swain, Thomas


Holman, Percy
Monslow, Walter
Swingler, Stephen


Holt, Arthur
Moody, A. S.
Sylvester, George


Howell, Charles A.
Morris, John
Taylor, Bernard (Mansfield)


Howell, Denis
Moyle, Arthur
Taylor, John (West Lothian)


Hughes, Emrys (S. Ayrshire)
Mulley, Frederick
Thomas, George (Cardiff, W.)


Hughes, Hector (Aberdeen, N.)
Oliver, G. H.
Thomas, Iorwerth (Rhondda, W.)


Hunter, A. E.
Padley, W. E.
Thompson, Dr. Alan (Dunfermline)


Hynd, H. (Accrington)
Paget, R. T.
Thornton, Ernest


Hynd, John (Attercliffe)
Pannell, Charles (Leeds, W.)
Timmons, John


Irvine, A. J. (Edge Hill)
Pargiter, G. A.
Tomney, Frank


Irving, Sydney (Dartford)
Parkin, B. T.
Ungoed-Thomas, Sir Lynn


Janner, Sir Barnett
Pavitt, Laurence
Wade, Donald


Jay, Rt. Hon. Douglas
Pearson, Arthur (Pontypridd)
Wainwright, Edwin


Jeger, George
Peart, Frederick
Warbey, William


Jenkins, Roy (Stechford)
Pentland, Norman
Watkins, Tudor


Johnson, Carol (Lewisham, S.)
Plummer, Sir Leslie
Wells, Percy (Faversham)


Jones, Rt. Hn. A. Creech (Wakefield)
Prentice, R. E.
Wells, William (Walsall, N.)


Jones, Dan (Burnley)
Price, J. T. (Westhoughton)



Jones, J. Idwal (Wrexham)
Probert, Arthur
White, Mrs. Eirene


Jones, T. W. (Merioneth)
Proctor, W. T.
Whitlock, William


Kelley, Richard
Pursey, Cmdr. Harry
Wilcock, Group Capt. C. A. B.


Key, Rt. Hon. C. W.
Randall, Harry
Wilkins, W. A.


King, Dr. Horace
Rankin, John
Willey, Frederick


Ledger, Ron
Redhead, E. C.
Williams, LI. (Abertillery)


Lee, Frederick (Newton)
Reid, William
Williams, W. R. (Openshaw)


Lever, L. M. (Ardwick)
Reynolds, G. W.
Willis, E. G. (Edinburgh, E.)


Lewis, Arthur (West Ham, N.)
Rhodes, H.
Wilson, Rt. Hon. Harold (Huyton)


Lipton, Marcus
Roberts, Albert (Normanton)
Woodburn, Rt. Hon. A.


Loughlin, Charles
Roberts, Goronwy (Caernarvon)
Woof, Robert


Mabon, Dr. J. Dickson
Robinson, Kenneth (St. Pancras, N.)
Wyatt, Woodrow


McCann, John
Ross, William
Yates, Victor (Ladywood)


MacColl, James
Royle, Charles (Salford, West)
Zilliacus, K.


McKay, John (Wallsend)
Shinwell, Rt. Hon. E.



McLeavy, Frank
Short, Edward
TELLERS FOR THE NOES:


MacMillan, Malcolm (Westen Isles)
Silverman, Julius (Aston)
Mr. Rogers and Mr. Lawson.


MacPherson, Malcolm (Stirling)
Silverman, Sydney (Nelson)

7. Vehicles (excise): agricultural tractors, etc.

Motion made, and Question,
That for the purposes of section thirteen of the Finance Act, 1959, a vehicle of which the two front wheels are less than a specified distance apart shall be treated as a three-wheeled vehicle.—[Mr. Lloyd.]

put and agreed to.

8. Income tax (charge and rates for 1961–62)

Motion made, and Question,
That income tax for the year 1961–62 shall be charged at the standard rate of seven shillings and ninepence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, shall be charged in respect of the excess at rates in the pound which respectively exceed the standard rate by the amounts by which the higher rates for the year 1960–61 exceed the standard rate for that year.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the

provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

9. Income tax (surtax rates for 1960–61)

Motion made, and Question,
That income tax for the year 1960–61 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1959–60.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. Lloyd.]

put and agreed to.

10. Income tax (dependent relatives)

Motion made, and Question,
That the amounts of two hundred and ten pounds and one hundred and thirty-five pounds specified for the purposes of section two hundred and sixteen of the Income Tax Act, 1952, shall each be increased by twenty pounds.


And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

11. Income tax (increase of relief for National Insurance contributions)

Motion made, and Question,
That the amounts specified in Part I of the Third Schedule to the Finance Act, 1960, other than the amounts of five pounds substituted by paragraph 2 of Part II of that Schedule, be increased as follows, that is,—

(a) those specified in paragraphs 1, 3 and 5 by three pounds, and
(b) those specified in paragraph 2, 4 and 6 by two pounds,

but this Resolution shall not require any change in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the sixth day of July, nineteen hundred and sixty-one.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

12. Income tax (double taxation relief)

Motion made, and Question,
That provision be made—

(a) whereby, as respects past as well as future periods, foreign tax is to be treated for the purposes of sections three hundred and forty-seven and three hundred and fifty of the Income Tax Act, 1952, and the Sixteenth Schedule to that Act, as payable if it would have been payable but for certain reliefs under foreign law;
(b) for allowing credit for foreign tax under Part XIII of the Income Tax Act, 1952, on any income in respect of which such credit was allowed in a previous year of assessment;
(c) for repealing the provision whereby for the purposes of the said Part XIII foreign local taxes are treated as not corresponding to income tax or the profits tax.—[Mr. Lloyd.]

put and agreed to.

13. Income tax (ministers' residences)

Motion made, and Question,
That in connection with exemption from tax under Schedule A for the official residence of a clergyman or minister of any religious denomination, it is expedient to modify the law relating to the taxing of rents and to maintenance reliefs.—[Mr. Lloyd.]

put and agreed to.

14. Income tax (capital allowances, etc. for motorcars)

Motion made, and Question,
That as respects vehicles of a type commonly used as private cars, provision be made for limiting capital allowances (with consequential amendments as to balancing allowances and charges), deductions from profits or gains or emoluments, and management expenses claims and maintenance claims.—[Mr. Lloyd.]

put and agreed to.

15. Income tax (assessments for Schedule E emoluments)

Motion made, and Question,
That—

(a) assessments to income tax (including additional assessments) made more than twelve months after the end of the year of assessment shall be made, as respects emoluments assessable under Schedule E, in accordance with the practice generally prevailing at the expiration of the twelve months, but without prejudice to any change of practice occurring before the sixth day of April, nineteen hundred and sixty-one;
(b) it is expedient to extend the time for making and amending assessments (including additional assessments) to income tax in respect of such emoluments received in the year 1955–56 or any subsequent year, and to make consequential provision for the purposes of Chapter II (expenses allowances) of Part VI of the Income Tax Act, 1952.—[Mr. Lloyd.]

put and agreed to.

16. Income tax (returns of interest payments by Industrial and Provident Societies)

Motion made, and Question,
That subsection (4) of section four hundred and forty-three of the. Income Tax Act, 1952, be extended so as to cover share interest as well as loan interest.—[Mr. Lloyd.]

put and agreed to.

17. Employers' surcharge

Motion made, and Question,
That provision be made for imposing and withdrawing surcharges on employers liable to pay flat-rate contributions under the National Insurance Acts or the corresponding enactments in Northern Ireland, so, however, that this Resolution shall not authorise a surcharge exceeding four shillings a week for each person for whom such a contribution is paid or the imposing of surcharges in respect of some, but not all, persons of any description relevant for determining the amount or aggregate amount of contributions payable under those Acts or enactments.—[Mr. Lloyd.]

put and agreed to.

18. Profits tax (increase of rate)

Motion made, and Question,
That as from the beginning of April, nineteen hundred and sixty-one, the rate at which the profits tax is to be charged by virtue of subsection (1) of section twenty-five of the Finance Act, 1958, shall be increased from twelve and a half per cent. to fifteen per cent.—[Mr. Lloyd.]

put and agreed to.

19. Profits tax (charges consequential on income tax amendments)

Motion made, and Question,
That it is expedient to authorise any charge to the profits tax which may result from amendments of the law relating to allowances, deductions or charges for income tax purposes.—[Mr. Lloyd.]

put and agreed to.

20. National savings stamps and gift tokens

Motion made, and Question,
That there shall be paid into the Exchequer any sums received by the Postmaster General from the sale of national savings stamps and national savings gift tokens, and that for purposes connected with such stamps and tokens it is expedient to authorise the issue of sums out of the Consolidated Fund and the borrowing in any manner authorised by the National Loans Act, 1939. of money for the purpose of providing or replacing sums to be so issued.—[Mr. Lloyd.]

put and agreed to.

Amendment of the law

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.—[Mr. Lloyd.]

5.22 p.m.

Mr. Hugh Gaitskell: I rise in accordance with the customary traditions of the Committee to offer on behalf of all of us our congratulations to the Chancellor of the Exchequer on his Budget statement. These congratulations, again in accordance with custom, relate of course to the form and manner of its presentation.
The Chancellor of the Exchequer has had an interesting political career. He is best known, I suppose, to the House

as a Foreign Secretary, with whom we did not for the most part agree. When he went to the Treasury there were those who said that this was not quite the right job for a man who had spent so much of his time on foreign affairs, but I recall very well the days when the right hon. and learned Gentleman was in opposition and we who are now on this side of the House were in power. He then certainly was, as a Conservative back-bencher, an extremely effective critic of financial policy. For my part, therefore, I was not surprised when he moved to the Treasury, and one expected from him a considerable display of expertise in his new post.
There are always advantages in having a new Chancellor of the Exchequer, because at the very least he is not tied down by the mistakes of his predecessor. He is free to say what he likes about former Chancellors of the Exchequer, and there are many precedents for a Chancellor, on the Conservative side particularly, saying to the House rather unkind things about those who went before him. The right hon. and learned Gentleman is no exception.
I could not have bettered the right hon. and learned Gentleman's indictment of the general state of the economy after more than ten years of Tory rule. Prosperity was definitely based on an insecure foundation and the situation in industry was most unsatisfactory. Our exports were quite inadequate, and there were many other things of a critical character which fell from the right hon. and learned Gentlemans' lips this afternoon. I agree with all that, but I think that he might have rubbed it in a little more.
If we consider the situation with which we are confronted today, we have to recognise that for a year now there has been virtually no expansion whatever in industrial production and that since 1955 we have had only one year in which production was expanding, admittedly fairly fast during those 12 to 15 months. But we are now stagnant again, and what is even more serious—and this is what the Chancellor admitted—is that in 1960 we had a balance of payments deficit on current account of not less than £344 million.
This is a very high figure indeed. One must contrast it with the aim repeatedly


stated by Chancellors of the Exchequer from the Conservative Front Bench that we should have a surplus of at least £300 million as an average figure over the years. But not only that. This deficit of £344 million took place in a year when conditions favoured us, when so far as the balance of payments was concerned the terms of trade were in our favour, not against us, as for instance they were so heavily against us in 1951. This took place at a time when production was not even expanding, and, therefore, one would not have expected on that account a rise in imports, which is indeed one of our problems.
I therefore cordially share the Chancellor's anxieties about the present situation. I wish I could say that his analysis of the situation with which we are confronted was matched by the measures he put forward to the Committee, because I cannot feel on any ground that they are adequate to deal with the situation.

Mr. William Ross: Or relevant.

Mr. Gaitskell: Or indeed relevant They do not exist.
What are the major problems? They are the expansion of exports, in a framework of rising productivity. Is there a single thing which in this Budget directly contributes to either of those? I cannot see it. There is no encouragement to investment here. It is all very well for the Chancellor to dismiss this in a sentence as not the only thing that matters. Admittedly it is not the only thing that matters, but it matters a great deal, and the fact remains that although manufacturing investment has been rising, though I have not had time to check the figures, I think it is now only about at the 1957 level. It ought to be much higher and much nearer to the level of our European competitors, and one would have thought that this year all efforts would have been concentrated on anything that would increase productivity. But not a bit of it.
On the Chancellor's proposals, I can only give my first reactions. My right hon. Friend the Member for Huyton (Mr. H. Wilson) will develop our views at greater length and in detail tomorrow. The Chancellor has, first of all, proposed to give the Government power to vary indirect taxes throughout the year at any

time between Budgets, and also to impose, modify or take away what I suppose could be called a payroll tax. In my opinion it would be foolish to dismiss this idea out of hand as just another interference. Certainly we would not oppose in principle giving a power to act between Budgets. There is something slightly absurd about waiting each year for a Budget before one can take action in the fiscal field, but one would need to think very carefully, not only about the particular idea that is involved here, but also still more about any application that might be made of it.
I would point out certain difficulties that seem to me to arise. First, on the proposal to vary indirect taxation, I do not see any special difficulty of a technical kind in varying the rates of indirect taxes. No doubt strong feelings would be expressed about this if and when the taxes were imposed, but I would have supposed that there would have been difficulties about varying Customs duty from time to time, apparently without any regard to any international obligation under G.A.T.T.

Mr. Selwyn Lloyd: Mr. Selwyn Lloyd indicated dissent

Mr. Gaitskell: The right hon. and learned Gentleman says that is not so. Perhaps he would clear that up.

Mr. Lloyd: That would be one of the specific exceptions which I made. It certainly cannot apply to any kind of import duty.

Mr. Gaitskell: In that case it is a very big exception. Clearly, if one starts from the cases in which there are no duties at all today, they are ruled out from being affected by this. Nor could one do anything which was in conflict with the margin of preference which is allowed under G.A.T.T. The significance of this as far as Customs duty is concerned is, therefore, not very great. I am obliged to the right hon. and learned Gentleman, because it is important to clear that up.
There seem to be two great difficulties about the payroll tax. The first is that the degree of employment and unemployment is not the same all over the country. It would be all very well to impose a payroll tax in what used to be called a red area, because there was a great shortage of labour in that area and one could anticipate that the result of such a tax would not be adversely to affect


employment. It would be quite another thing to apply such a tax—and it must be applied nationally—in development areas where there was already unemployment. This is one great difficulty.
The second difficulty which I see is that when one imposes a tax of this kind, by its very nature, one must increase the costs of those industries which use proportionately a large amount of labour. It is not their fault that they do this. It is not the fault of the coal mining industry that wages happen to be a much larger proportion of total costs of production than they are, for instance, in the electricity supply industry, which is a capital intensive and not a labour intensive industry, or, as my right hon. Friend the Member for Battersea, North (Mr. Jay) points out, in the chemical industries. We shall certainly distort the price structure, which, as far as I remember, is something which Conservative Chancellors of the Exchequer have always been very hesitant about on previous occasions.
This is, however, a matter on which I would not take a very firm line either way. One needs to know a great deal more about it and one would be guided in one's attitude to it by the way and the circumstances in which such taxes were imposed and modified and the use which was made of any revenue obtained from the tax.
We welcome some things which the right hon. and learned Gentleman has done; we certainly do not object to them at all. It was common sense, as I think my hon. Friends agree, to increase the tax allowance in respect of National Insurance contributions. It is a flat-rate allowance and, therefore, since the National Insurance contributions have been raised, it is only right that the allowance should be raised, too. If the right hon. and learned Gentleman had not done that, he would certainly have been dealing very hardly with the vast majority of the population.
We welcome, for what it is, the small increase in the dependants' allowance. The House as a whole will clearly welcome the tax relief to be afforded to those receiving compensation for suffering and loss incurred as a result of the Nazi régime. All those things are to be welcomed, and there are other minor

changes to which I do not think we object.
When it comes to the taxation side, I must say outright that I am glad that at last the Chancellor has done something to deal with the problem of profits on television. He has imposed a modest tax on the advertisements of commercial television. It is something. It is the thin end of the wedge. But let him have no illusions; as far as we are concerned, the immense profits which have been virtually handed to these companies on a plate will still be very large, even after this tax has been imposed, not least because it is a tax not on their profits as such but on their advertising, and it may well be that they can pass a great deal of this on to the firms which advertise with them.
We do not oppose the proposal for the increased tax on hydrocarbon oil. Like the tax on television advertisements, this has been part of the Labour Party's policy in recent years, and we are glad that this has been done. We think that there is a case for it, particularly in the light of the relationship between oil and coal to which the right hon. and learned Gentleman referred.
Having said that, I must say that I regard the other main measures which the Chancellor has introduced as being both inadequate and unjust. I will comment first on business expenses. Are we to suppose that the people who get away with a great deal in this respect—and it is common knowledge that this is a scandal—will be terribly exercised because the annual depreciation allowance on a motor car, as I understand it, is to be increased from 9 per cent. to 12½ per cent. and the total amount which may be written off in a single year is to be limited to £2,000? No doubt a few people who run Rolls-Bentleys will be a little concerned about this, but nobody else will be much influenced by it. As I understand it, that is what the Chancellor proposed. If he imagined that his very harmless words about this whole matter would cause any despondency among business men, then he had only to look at the face of his hon. Friend the Member for Kidderminster (Mr. Nabarro) to see what are the true facts in this matter.
I come finally to the major change which the right hon. and learned Gentleman has proposed, this very substantial


reduction in Surtax liability. I should like to make it plain that for many years we have taken the view generally that the taxation system was in great need of reform because it imposed an unduly high burden on those who earned their income and were subject to earned Income Tax as compared with those who got their money much more easily than either by the sweat of their brow or by their brains or in any way which is earned. On that account, we have repeatedly recommended a change in the whole situation by which speculative profits and capital profits would be made liable to taxation and the present evasion of death duties and inheritance taxation would be prevented.
In opposing the Chancellor's proposal, I do not want there to be any misunderstanding. We are by no means satisfied with the present situation. If the right hon. and learned Gentleman had proposed a far-reaching measure of fiscal reform in the course of which he proposed to impose a capital gains tax which, whatever he may say, is long overdue in this country; if he had proposed a mere redistribution in the same income group between those who get their money very easily and those who get it in a more difficult way; if, above all, he had brought it forward in a year when we had not just had a long Parliamentary battle about the increase in National Health Service charges and contributions, there might conceivably have been something to be said for some relief to the Surtax payers, together with other direct taxpayers.
But the facts are these: the right hon. Gentleman takes roughly, in round figures, in a full year, £60 million off Surtax. It is very close to the amount which he has imposed in the Health Service contributions and charges. What happens is that a man on £10 a week is to pay 10d. a week more in contributions and is to pay more when he goes to the doctor for his prescription, and the man earning from £2,000 to £5,000 a year is to be substantially better off. Nothing which the right hon. and learned Gentleman says can get away from that direct comparison.
Furthermore, this is done at a time when immense capital profits continue to be made. I think I am right in saying that the rise in the average value of

Stock Exchange shares, of equities, in the last six months is at least between 10 per cent. and 20 per cent. It is at any rate very substantial. Of course, there are pauses; shares do not go up in value all the time. But if we take the figures, for instance, since 1953 we see that the increase in the index of equity shares is about 400 per cent. It is enormous. Even in the last couple of years the rise has been very substantial. Yet nothing is done about this. We all well know that it provides a very large increase in the available purchasing power to a very small number of people. It is high time that they paid their fair share of the contribution to the revenue.
There is one other thing which I would say to the right hon. and learned Gentleman in connection with his proposals for relieving the Surtax-payers. In the early part of his speech he mentioned one danger which confronted the economy today; he was concerned about the tendency towards rising costs. He pointed to the fact that wages had been rising faster than productivity.
I would make two comments on that. Whether wages rise faster than productivity depends not only on whether wages rise but also on whether productivity rises, and this is the trouble—that productivity has not been rising. For the last year it has almost certainly fallen, because we have a rather larger number of people in employment and we have a stagnant industrial production
Secondly, over and above that, does the right hon. and learned Gentleman imagine that the organised workers will feel very disposed to respond to his appeal to exercise self-restraint when they are obliged to pay not only about £50 million more in Health Service contributions, but about £240 million more in the new pension scheme contributions, largely to relieve the Exchequer and at a time when the Surtax payer is being relieved to the tune of £60 million? The Chancellor of the Exchequer may say that all this is offset by Profits Tax, but the rise in profits in the last year alone fully justified a further small increase in Profits Tax.
I sum up the Budget in this way. It seems to me that all Budgets should be tested by two criteria. First, will they benefit the economy as a whole? Will


they lead to an expansion of production and, at the same time, a favourable stable balance of payments? Secondly, will they distribute the income of the country more equitably?
On both these counts this Budget is to be condemned. It does nothing whatever to stimulate production, nothing whatever to stimulate exports, and unquestionably, so far as it makes any changes at all, taking into account earlier changes—they must be taken into account, because they are a form of tax and should have been made at the time of the Budget—there can be no doubt that it makes for a more unfair distribution of income, and on that count alone is also to be condemned.

5.41 p.m.

Vice-Admiral John Hughes Hallett: The right hon. Gentleman the Leader of the Opposition began by saying that as was customary he would only criticise, or chiefly criticise, the manner in which my right hon. and learned Friend delivered his Budget statement. However, he devoted a good deal of his time to the substance of what was in the Budget. I am not sure that he entirely and correctly apprehended the precise nature of many of the proposals.
This is I believe my maiden speech in a Budget debate. One great advantage when a non-expert is speaking is to be called first before the experts can be called and also at a time when, by tradition, fortunately most of my hon. Friends have gone to listen to further details from my right hon. and learned Friend the Chancellor of the Exchequer.
I must say, for what it is worth, that I regard the Budget as one of great courage and wisdom. I am sure that very few people expected before my right hon. and learned Friend rose that he would propose an increase in taxation of no less than £80 million a year. I am equally sure that his judgment is correct and that that is the right thing to do. Having heard the Budget statement, I shall certainly soften some of the criticisms that it had been in my mind to make of the manner in which our economic affairs have been conducted in the past few years.
I was also delighted to hear my right hon. and learned Friend say that he is

a firm believer in the value of administrative economies. Many of us on this side of the Committee have laboured, on the Estimates Committee, on the Public Accounts Committee and, when possible, in Estimates debates on the Floor of the House of Commons, to criticise the more detailed aspects of expenditure. We have had very little change in the past, because we have always been met by the argument that little can be done administratively and all depends upon policy.
I was also pleased and relieved to hear my right hon. and learned Friend say that the main purpose of his Budget is to counter inflation. I remain convinced that that is the principal threat facing the country today, and indeed it is about that that I have really risen to speak. We must face the fact that my right hon. and learned Friend inherited a difficult situation. He has certainly made the best of it, although I daresay that he and many of his colleagues must now regret that they did not give more robust support three years ago to my right hon. Friend the present Minister of Aviation when he tried to rout the squander maniacs once and fox all.
We must face the fact that the country has once again been spending too much. It does not matter in which quarter we look—the Government, local government, the nationalised industries and private industry are all to blame.

Mr. George Thomas: Defence.

Vice-Admiral Hughes Hallett: That is part of Government expenditure. I strongly criticise the increase of £49 million, or whatever the sum was, in this year's Estimates, but I hasten to add that that is a drop in the ocean compared to the general increase in Government expenditure.
It is not only a matter of corporate expenditure. Almost every individual in the country who has been able to lay his hand on the cash has been spending too much. I say this notwithstanding the rise in the percentage of savings. It is the underlying reason for the adverse balance of payments situation. It is also the reason for the regrettable renewed rise in the cost of living.
I very much doubt whether even after twenty-one years of this nightmare fall


in the value of money the effect it has on the tragic minority of people whose main income is a fixed one is sufficiently understood. We argue at great length about the rate of Income Tax. But how little that matters to the great majority of people compared to the cost of living. The present rate was fixed in the 1959 Budget when the index stood at roughly 110. Today the index has risen to 113.
It is interesting to note that to a married man who retires on an income or pension of £750 a year the effect of the 3 point rise in two years is the same in round figures as if there had been an increase in the standard rate of Income Tax of 1s. 6d. in the £. In other words, even for those who enter retired life with well above the average income of retired persons, the comparatively small rise in the cost of living which has taken place in the last two years has had twice as much adverse effect as the benefit they gained from the large reduction in the standard rate of Income Tax which was made two years ago.
I must be fair and admit that in the special case I have taken the £750 a year man has been approximately compensated by the rise in the rate of National Insurance pensions which we approved earlier this year. However, it is also only fair to say that that increase was made for very different reasons. It is largely fortuitous that that should be so.
I invite the Committee to consider the effect of the change in the cost of living, small though it is often represented as being, on the more wealthy members of the community. Let us take the case of these young executives—they must be very brilliant—who earn £2,500 a year. If my calculations are right, the purchasing power of their net income has fallen by £46 a year in the last two years. The Surtax concession that they will enjoy from 1963 onwards is worth £40.
For a short time—rather less than three years—it seemed that at last there was some hope that the value of the £ had been stabilised. That hope has now faded, and I very much doubt whether any one or any event will ever revive it. The prudent man will surely now abandon the expectation of living to see a stable currency, and will seek to order his affairs accordingly.
Let us, therefore, consider for a moment the causes and consequences of this state of affairs. Many experts enlarge upon the precise reasons for rises in the cost of living. They use economic jargon that I do not pretend to understand—I am not sure that they themselves always understand it. My own explanation, as a non-expert observer of the industrial scene, is simply that Britain has invented and perfected a method whereby new inventions that are in-intended to lower production costs have the reverse effect of raising them.
I want to take an imaginary example. Let us suppose that some new automatic machine tool is invented to make car bodies. Let us suppose that, at a cost of £1 million, some manufacturer installs it in his works. He does so because he believes that it will enable the work now done by, say, 2,000 men to be done by, say, 1,000 men, and thus reduce the cost of the final product. But what happens, as we all know, is very different.
To begin with, there is a redundancy dispute; probably the threat of a strike. In the end, it is agreed that instead of 1,000 men being discharged only 500 men will be discharged, leaving at work on the process 1,500 men of whom 500 will be employed gazing at machines perfectly capable of working without any human scrutiny at all.
The next stage is a wage claim, starting from shop stewards of those 1,500 men and based on the argument that their productivity has gone up—a wage claim that is almost invariably conceded in whole or part. Then, of course, the shareholders who put up the capital expect higher profits and higher dividends. At the end of the day, the firm is fortunate if it succeeds in holding the cost of the product, let alone reducing it.
That, however, is only the beginning of the process. If that were all, it would be rather hard to justify even mentioning it in a debate on our economic state. The fact that there has been a rise in the wage rates and earnings in one group in this part of the engineering industry sets off a kind of chain reaction and leads to a corresponding rise in the wages and salaries in every branch—

Mr. Ellis Smith: The engineers had no rise in two years.

Vice-Admiral Hughes Hallett: If I may say so, the hon. Member has interrupted me with a point that is not relevant to the general principle that I am describing. I am also surprised to learn that the engineers have not had a rise for two years.
That is not the end of the process. The whole Committee knows that when there is one rise in one sector of the industrial team today it is followed by demands for rises in sympathy inside industry and, indeed, by automatic rises in the Civil Service, the fighting Services, and so forth, whose wage conditions are reviewed automatically at regular intervals by relation to the industrial wage rate.
In an authoritarian State, I have no doubt that all this would be avoided by the control of wages and salaries, but that is something we know would be quite unacceptable and unwanted by anyone in this country. The alternative that we have so far seen is that Minister's appeal for restraint. I suggest that such appeals are a sheer waste of time and breath. The trade union leaders, the Ted Hills of this world, the men who speak for professional associations on various wage negotiating committees are not open to appeals of that nature. One and all, very understandably, they are out to get as much as they possibly can for their own members, and let the devil take the rest—

Mr. Charles Loughlin: I am sorry to interrupt the hon. and gallant Member, but he must not make attacks like this on trade union leaders. Does he not recognise that a tremendous contribution has been made by the trade union movement to the increased productivity we have enjoyed over the last few years? Instead of simply attacking the trade unions, would it not be better for him to outline to the Committee how he would apportion the increased productivity arising from the introduction of new methods of production? We may be getting somewhere then. Otherwise, he is simply repeating that which has been said time and time again, to no purpose.

Vice-Admiral Hughes Hallett: I can answer the last part of the hon. Gentleman's question at once. I should apportion the increased benefits of productivity to a progressive lowering of prices.

But the more interesting part of the hon. Member's intervention was his description of my observation as an attack. If he likes so to interpret it he is welcome to do so, but I was careful to say that appeals for restraint to those who take part in wage negotiations are a waste of breath because the job of those people is to secure the best possible return for their own members—

Mr. Loughlin: Then why refer to Ted Hill?

Vice-Admiral Hughes Hallett: Because, as I understand it, he happens at the moment to be the Chairman of the Trades Union Congress.
I have explained why I am so much afraid that this disastrous process of rise in prices will continue. It is a process whereby those members of our population—that is to say, the majority of the population—who are in a strong bargaining position, because they are at work, ceaselessly improve their own standards of living at the expense of those on fixed income; that is to say, mainly at the expense of the elderly and the retired. There is nothing whatever new in all this. I can only say to hon. Members opposite that I am thankful to say that the process has been somewhat slower under Tory rule than it was in the six years immediately after the war when they were in power.
What concerns us today is not the past but the future. What is likely to happen when people as a whole realise that there is no hope of stable prices? This matter was carefully considered in the First Report of the Council on Prices, Productivity and Incomes, under the Chairmanship of Lord Cohen, a Report that the Opposition derided so much but which, none the less, I venture to think had some very wise things to say under this head.
I want to quote one or two sentences from paragraphs 96 and 98 of that first Report. It stated:
Once, however, a steady upward trend of prices came to be generally accepted and anticipated, something would have to be done to mitigate the rentiers' losses—otherwise the Government would cease to be able to borrow any money on fixed interest terms. In the summer of 1957 there were, indeed, signs that such a development was far from being merely an academic possibility.


Later in paragraph 98, describing what might be done, the Committee says:
Wages, salaries and pensions could be tied to some index of the cost of living. Even interest and principal of Government and other loans, and the premiums and benefits of insurance contracts could, in theory, be adjusted in the same way. It seems, indeed, highly probable that if the rise in prices is not successfully checked, sliding scale adjustments of this kind will naturally develop under the pressure of the groups who suffer most from the present regime.
The Report goes on in the same paragraph to point out the dangers and disadvantages of any such pressure. It says that the most important result would likely be
that the upward movement of prices would cease to be slow.
The final sentence in this paragraph, which we ought to note carefully, is this:
The final result might well be a situation so disastrous that a remedy would have to be sought at all costs, including perhaps heavy unemployment and distress.
If that tragedy occurs, let no one blame the Government. The responsibility will rest fairly and squarely on both sides of industry and also on the leaders of the professional associations.
I submit that the Government have a plain duty to help these people in fixed income groups, and to do so even if certain risks are involved. Besides that, we on this side of the House fought the last election on a pledge that elderly people should share in the growing prosperity of the country. So far that pledge has been honoured in part.

Mr. G. Thomas: Fractionally.

Vice-Admiral Hughes Hallett: It has been honoured more than fractionally in respect of those whose main income takes the form of National Insurance income. It is right that attention should first be paid to those of our fellow countrymen who are the worst off.

Mr. Loughlin: The Surtax payers!

Vice-Admiral Hughes Hallett: The millions who have retired on savings or who depend chiefly on an occupational pension are worse off, both absolutely and relatively to the working population, than they were at the time of the last General Election. The question I therefore ask is: how can they be helped? In the case of public service pensioners, who add up to an important proportion of

this body of people to whom I am referring, and in the case of retired employees of the nationalised industries, the answer is simple. The solution, one which lies within the power of the Government to introduce, is to lay down the principle that uniform pension rates should be introduced—uniform, that is to say, for any rank or grade and independent of the date of retirement.
I am well aware that that has always been the claim of the various pensioners' organisations. I myself supported the Government in resisting that claim when we debated the Pensions (Increase) Act, 1959, because at that time I sincerely believed and hoped that we had at last stabilised the value of the £. I could not take that line again because I am now sure that there is no other equitable solution.
Exactly the same can be said of those who depend upon occupational pensions paid by industry. To be fair, many private concerns have an excellent record in implementing the policy. But although the Government have no direct powers in this field, I fancy that they have a powerful weapon in the new graduated insurance scheme. Surely it would only be necessary to raise the upper limit of the earnings which attract graduated contributions, and in due course graduated pensions, in order to compel firms which run private schemes to make comparable adjustments.
There remains the question of those who save privately, whether they do so by means of personal investment or through some life assurance policy. In neither case can anything be done retrospectively. But I for one support the idea of a special type of Government bond to help those people. I do not propose to go into the details because there are many forms which such bonds can take, but one thing they share in common. They are personal to the individual who buys them. They bear the date on which they are bought. They bear some index—I would prefer the average earnings index rather than the cost-of-living index—and the rate of interest which they pay varies during the life of the individual purchaser as the index varies. Such bonds are redeemable at par—no less, no more—during the life of the purchaser and they are compulsorily redeemable at his death.
Moreover, some relief to the Exchequer could be obtained by the issue of such bonds because I have little doubt that a lower rate of interest, rather than the current rate of interest, would attract many investors. I have no doubt that many people would accept perhaps 4½ per cent. today in exchange for a hedge against further inflation. Other countries, as I understand it, have long since adopted this expedient when they have come to admit that their currency is unstable, and, with great regret, I think that that time has now arrived in our own country.
I have no doubt that these measures can and will be denounced as inflationary, and of course they involve the risks that the Cohen Committee foresaw, but so also does complete inaction. What is the alternative? What are commonly called the old middle-classes of this country who have already lost so much are not going to be fooled for ever and ever; neither are they going to give up saving and making provision for their old age. What they can do, and what I believe they will do, is increasingly to revert to the older methods of saving. That is to say, they will save in kind rather than invest. They will try to lay in sufficient stocks of durable goods to last them their lifetime. They will invest increasingly in bricks and mortar, and indeed they are doing so now. Finally, I dare say some would even prefer to save in the form of cash rather than risk its investment and subsequent reinvestment, thus possibly inflating the currency still further.
Such a prospect should be taken very seriously by the apostles of an expanding economy, because unless we are careful, one important source of money for capital investment will be progressively cut off. Should that happen, I say again that industry itself will only have itself to thank because in the eyes of millions of people in this country an expanding economy has come to be synonymous with the progressive lowering of their own standard of living.
My plea, therefore, is on behalf of those who live on fixed incomes. I am thinking not only of those who live on very small fixed incomes whom my hon. Friend the Member for Tynemouth (Dame Irene Ward) champions so often,

but people as a whole who live on fixed incomes. By all means let us do our utmost to increase the nation's wealth and productivity—and I am sure that we shall hear a great many platitudes on that subject during the course of this three-and-a-half day debate—but do not let us attempt this expansion at the expense of those deserving people.

6.10 p.m.

Mr. Ellis Smith: I believe that the immediate result of this Budget will be that the House will be presented with the most controversial Finance Bill for many years, and I am fortified in that belief by the excellent preliminary observations made by my right hon. Friend the Leader of the Opposition. I want to place on record my objection to the continual use of Parliamentary time in the way that it is used in this Committee. In my view, which is based on past experience, one does not achieve the best results from having a Budget Statement and then the debate on that and the debate on economic affairs at the same time. In my view, to obtain the best results, from the point of view, particularly, of our country's interests as a whole, it would be better to have two separate debates in two separate weeks so that adequate attention could be given in a comprehensive way to both finance and economic affairs. Moreover, the time has long since arrived when economic problems should be dealt with by a separate Ministry, not by the Treasury as they are now.
I listened to the Chancellor with great care. I am very pleased that, at last, a Chancellor of the Exchequer has made a statement about the proposed action to deal with public expenditure. The right hon. and learned Gentleman went on to say that we must look five years ahead, and he is having a study made. I accept the first step taken in that direction but, if that is correct action, then it is logical also to expect similar action in economic affairs. I hope that this will be stressed more and more in the future.
As a result of past experience, I suspect that nothing much will come out of the Plowden Committee. The Chancellor said that exports are disappointing, with consequent serious effect on


our balance of payments, and the position is not at all satisfactory. Any student of economic affairs will accept that. The right hon. and learned Gentleman then said that our Budget objective would be to increase exports and we should be able to gain for ourselves a larger share of expanding world trade. We must, he said, take into account future trends. My own view is that one or two of the proposals contained in the Budget will discourage exports and will not assist in our balance of payments problems.
I welcome the Chancellor's acknowledgment that the tax system needs simplification and his statement that the difficulties would be examined before the next Budget. His proposed surcharge tax on employees is, in my view, a retrograde step. It will tend to discourage exports. It will tend to increase the cost of production and, therefore, to lower our competitive position in relation to other countries. Several of his proposals of that kind should receive very searching examination by all those who have any regard for the position of our export trade.
This week, as I say, opens Parliament's annual review of our economic and financial affairs. For generations, the people have toiled to build up our great industrial Britain. I believe that it could become a greater Britain provided that we adopted the same policy in economic affairs as the Chancellor is at last proposing for financial matters. Britain could become much greater in this modern world if we planned and organised to enable us to fulfil his objective.
If our resources were organised and regulated in accordance with plans prepared for the future, this would be consistent with several of the proposals which the Chancellor made for dealing with finance. In my view—this applies to this side of the Committee in particular—it is time we accepted the military limitations imposed upon us by the post-war contracted world and the emergence of the two gigantic Powers, and it is time we admitted—this applies to the whole Committee—that we cannot stand the colossal military expenditure for which we have been responsible for many years. It has gone up this year to £1,656 million. In my view, we have

lost fifteen years. We have still time, though not very much, to make up for those fifteen years.
If any hon. or right hon. Member on either side of the Committee disagrees with anything I say, then I invite him to go to the Library and ask for the book entitled, "The Long Revolution". I invite him to study particularly the chapters dealing with Britain in the 1960s. Hon. and right hon. Members opposite should read pages 294 and 295. I ask my hon. Friends, particularly those who met in mansions after the last General Election and proposed to retreat, to read page 298, read it again, and then read pages 211 to 235.
One of the most important needs in this country today is to have complete confidence that democracy can deliver the goods. Our country today, especially on the economic and industrial side, could be made just as dynamic to meet our peace-time needs as we made it in war time, provided that a correct policy of the kind I am outlining were adopted.
Some of us remember the days when the Conservatives were completely discredited in the eyes of the people of this country. It was my hon. Friends, and, even more, the trade union movement, who were responsible for bringing about that fundamental change in our nation which led to the Coalition "Win the War" Government. I believe that we are slowly but surely moving towards a similar situation in economic affairs, and that is why I make my plea today. I am reinforced in what I say by opinion represented in growing measure on the other side of the Committee, particularly in large industrial organisations, which recognises that the time has arrived when we should be applying a policy more in tune with the 1960s in dealing with our economic affairs.
I am reinforced in what I say by some of the most competent economic opinion in the country. For example, I have here an extract from a fine publication which deserves a much bigger circulation, namely, the quarterly publication of the National Institute of Economic Review. The key to understanding our present economic trend is to be found in a few extracts from it. The first extract that I wish to quote is this:
It seems unlikely that Britain can hope to do much more than balance her current


account this year. Britain's exports are still heavily concentrated in sterling area markets. She probably has less chance of keeping her present share there than of increasing it elsewhere. Taxation in Britain is not exceptionally heavy compared with other European countries.
On page 18 there is this sentence:
Britain's poor export performance during last year was the more surprising because, for the first time for a number of years, the change in the area pattern of world trade was not unfavourable to her.
I put a number of searching Questions to the President of the Board of Trade, to the Financial Secretary to the Treasury and to other Ministers in order to obtain from them statistical evidence to illustrate the correctness of the line that I was, and am now, taking. It would take too long to quote extracts from those Answers, which I should have liked to do in order to reinforce my case, but they are on record. Therefore, I will not take up time by quoting them.
One of the greatest indictments of our past economic policy appeared in the Daily Mail of 13th March. It drew attention to a devastating letter which had appeared in The Times and then went on to make a critical analysis of the economic policy being pursued by the Government. I believe that what it said was correct. When one considers the position in the county from which I come and the great change which has taken place over the years, the inevitable question which arises is, are we putting too many of our eggs in one basket? This question arises mainly from the fact that we have an uncontrolled economy. There is no regulation and no planning of the economy, as the Chancellor is now proposing. I do not say that this is the complete explanation of today's problems, but I say that it is part of it.
The proportion of Lancashire's cotton products which is exported today is 10 per cent. compared with 85 per cent. in 1912. More recently, the United Kingdom's share of an increasing volume of world trade in cotton and man-made fibre piece goods dropped from 23 per cent. in 1937 to 6 per cent. in 1959. There is no attempt to regulate or to organise our economy. We leave it to private enterprise. I am the first to give credit where it is due, but I say that the responsibility for and the organisation of our economy should be a

national responsibility so that we may attain the best export results possible from the great work which is being done by the manufacturing industries of this country.
I have here a reply which was given by the President of the Board of Trade to a Question which I asked on 17th May last year. It concerned the export of manufactured goods from the United Kingdom, Germany, France, the United States, and Japan, among others. Here again, I wish to save time and therefore will not quote what was said, as I should have liked to do. However, any student of economic affairs is bound to be concerned at the continuous dwindling in our share of world trade as shown by official statistics presented by the President of the Board of Trade on 17th May, 1960. I could give reply after reply by Ministers on similar lines.
The Economic Survey is further evidence of the need for a national plan. There is more need for a national plan in Britain than in any other country. The central Government have less influence on our economic affairs than that of any other country. We are more dependent on exports than any other country. Because of the high degree of skill of our workpeople and the techniques which have been developed—we have led the world in the development of patents and technology over the years—there is more good will for the people of our country and more demand for the products of our industry than for those of any other country. We should be capitalising on this and doing justice to our past in order to safeguard our future. At present, we are not doing this. The vested interests in this country exert a more powerful influence on economic affairs than they do in any other country. Therefore, instead of retreating from ideas, as some people do, I believe that there is more need for them than ever.
This is an extract from the Economic Survey. The Government
…recognise the desirability of having a higher and steadier rate of growth, provided that this can be done without risk to the balance of payments, in order to encourage the sense of security and confidence in the future which are so important for business development".
I accept that wholeheartedly. That is as sound an economic proposition as it is possible to get. In order to do justice


to the ideas in the Economic Survey, hon. Members should be approaching our problems in a twentieth century way. In order to be worthy of the people in the export industry, which is doing so well, we should be harnessing our national resources to more modern ideas.
Some of us stand on good ground in this matter, because we have consistently and insistently advocated what I have been saying for many years. At last we are receiving increasing support—in many leading articles in newspapers, from many financial editors, from the Federation of British Industries, and from institutes concerned with economic affairs. We welcome the visitors from France to inform certain people in London of the results of their economic planning.
On 6th April, 1961, the Guardian stated:
'it is axiomatic that the growth of the economy must be interlocked with the growth of exports'.
The President of the Board of Trade will accept that. The question is, do hon. Members insist that the Government should adopt a policy following the lines of that quotation? The Guardian went on:
Endeavours by Government and industry to foster the growth of the economy will succeed only if they are designed to improve the country's competitive power. Growth and competitiveness can never be separated.
After a long connection with large-scale industry engaged in world competition, I readily accept that, but when will the Government take action to implement suggestions of that kind? Exhortation has now been tried for fifteen years, but it has met with only limited success. We now need to take the next logical step forward in harmony with the Chancellor's new ideas about finance, and we have to be prepared to look ahead for five years to plan, organise and regulate the economy to get the best results.
If that reasoning is accepted, there must be a national plan, and that would mean a Ministry of Production and Economic Planning. That would call for a programme of action and it would set before the country an objective for which we would all work together, as we worked together during the war. Such a Ministry would draw up a list of priorities and would have to show

more concern for the morale of labour than has been the case for the past few years. Highly-skilled men cannot be treated as they have been treated all my lifetime without there being some reaction sooner or later.
Just as the world is contracting in a military sense, so it is simultaneously expanding as a result of a general desire to assist backward areas and under-developed countries and to increase co-operation. That should provide Britain, a great industrial country, with the greatest economic opportunity it has ever had.
Because of these strongly held views, I asked the Prime Minister to consult other Heads of Government about holding a world economic conference this year. I followed that by asking whether the Commonwealth Prime Ministers' Conference would consider the need for an economic plan for the Commonwealth. The Prime Minister said that while he sympathised with the objective, he was not convinced of the usefulness of the method proposed. I went on to deal with the need for the Commonwealth to have a Commonwealth approach to economic problems. The Prime Minister said that he was entirely in agreement with what was suggested and that it seemed an irreproachable proposition. So many times I have heard sympathy expressed with views of this kind, but the time has arrived for action and the sympathy should be translated into concrete realities so that the country can work in harmony with modern twentieth century needs.
For many years after the war, we did not have intense competition from Germany and Japan, so we had a good start. What is the explanation why we have been left behind since then? I hope that during our debates of this week it will be explained to us why we have not maintained our relatively strong position. For fifteen years all engaged in the exporting industries have made great and increasing efforts to increase exports. Why are we not now in a stronger position than we were?
My own answers are, first, that we do not have a national objective. We are not working and striving for a common objective upon which we could all unite as we did to win the war. Secondly, we do not have an economic plan—we do not have an economic "General Staff".


Thirdly, for ten years we have subordinated our trade and economic needs to our foreign policy—I admit that that is a strong statement. Fourthly, the powerful vested interests in this country are better organised than they are in other countries.
It is time that we worked out a policy to assist the growth of exports. The Economic Survey says:
United Kingdom exports may be expected to benefit from any expansion of world trade, but only if they are competitive in price and delivery…
Why have we not benefited more than we have in the last fifteen years? Our products are competitive in price. Why are we not adopting a national plan of the kind I have advocated?
The Economic Survey goes on to deal with personal expenditure. My only comment on that is that the Federation of British Industries has complained of Government policy in the last two or three years that it is economic suicide based upon political expediency. The Economic Survey goes on to deal with the need for more fixed investment and says:
Investment by manufacturing industry, most of which is in the private sector, which had fallen during 1958…recovered…
I am sure that we all welcome that, but the Survey goes on to say that there was a substantial rise in imports and at the same time a relative reduction in exports.
My view, based on experience and reinforced by the Chancellor's statement this afternoon, is that the time has arrived for certain imports to be controlled. We had a great success in this respect during the war when one of the most efficient Government Departments was the British Commercial Trading Corporation. Its object was to buy raw materials in all parts of the world to prevent the Germans from getting them and also so that we could continue the war, buying raw materials at the minimum cost and guaranteeing that we would keep industries going. The time has arrived for that to be done in peace.
British exporting industries are paying more for raw materials, which are processed into exports, than are the exporters of any other country. The reason lies in the powerful trade associations which began to get a grip on the impart of

raw materials in 1931 and which, year after year, have increased their efficiency, their control and their grip, with the result that the hands of exporting industries are tied behind their backs before they even touch an ounce of raw material. It is time for that position to be altered. This is especially true for the engineering industries whose exports form a greater percentage of our total exports than do those of any other industry.
My views may not be accepted for the time being, but I have sufficient knowledge of the country's history, and especially that of the labour movement, to know that anyone who has the courage to pioneer will find that his views may not be accepted in his lifetime. However, as sure as I am standing here, if our country is to become greater and we are to maintain and improve our standard of living and hold our own with the rest of the world, the kind of policy I have enunciated will have to be accepted.

6.40 p.m.

Mr. A. E. Cooper: I want, first, in company with other hon. Members, to congratulate my right hon. and learned Friend on what I regard as one of the finest Budget speeches to which I have listened in eleven years. There are some parts of the Budget which will not be to the liking of everybody, but generally speaking it is a Budget which will be applauded in the country. One of the significant points is that the three most important matters which arise out of the Chancellor's speech either do not appear in the Schedule of Budget Resolutions or will not be in this year's Finance Bill. I do not know how that has been contrived, but it seems to me to be very clever.
I sometimes wonder whether the right hon. Gentleman the Leader of the Opposition is a politician or an economist. His speech today was overladen with political prejudice. The Labour Party, it seems to me, have become infected with this cult of universality and have a communal cookhouse mind; they have become so conservative in their approach to our problems that they are unable to look at them with a liberal mind. They must face the fact that high taxation, and certainly excessively high taxation, is not only a direct encouragement to tax evasion, tax avoidance and the business


expense account but is positively inflationary.
I had hoped that, notwithstanding the difficulties of the present balance of payments situation, it would be possible to avoid any increase in taxation this year. It must be remembered that the Government's proposals increase the level of taxation by about 1·3 per cent. This is after many years in which the tendency has been the other way.
Why has this situation arisen? Are we trying to do too much? Are we investing too much overseas in the underdeveloped countries? Unfortunately, in the world struggle against Communism in which we are engaged, we cannot afford to do less than we are doing, and in some way this money must be found for such investment.
The present economic situation, both here and in Europe generally, is a direct encouragement to close ties being worked out between the United Kingdom, the Commonwealth and the rest of the free world, including the United States. When such an arrangement has been worked out we may well have to forgo some of our sovereignty, but in this tremendous struggle in which we are all engaged that is a cost which we may have to bear.
I suggest that the basic problem for this nation is our export potential. Does the Budget help in that? It will be argued that it provides no direct incentive to industry as such but provides only incentives to the individual, and that is a valid criticism. It may be argued that the total result of the Budget is to increase industry's costs and thereby to make it more difficult for us to compete in markets overseas. Having regard to the fact that the increase in taxation is about £80 million a year and to the fact that the present national product is about £23,000 million a year, I do not think that this year it is likely to have very much of a deterrent effect upon our exporting industries.
I submit that production is probably not our basic problem. If it were at present desirable, I have no doubt that production, taking industry as a whole, could be increased substantially within the limits of the existing plant and labour. Throughout the country there is still some short-time working, there is still under-employment of resources and

there are still far too many restrictive practices both in industry and, if I may say so without causing offence to right hon. and hon. Members opposite, within the trade unions.
I have no doubt that tomorrow the right hon. Member for Huyton (Mr. H. Wilson) will give his league table its annual airing, garnishing it with a few merry quips at which we shall all laugh, and no doubt in consequence he will get a very good Press on Wednesday morning for a very witty speech. Generally, what he says is not very constructive when we consider our economic problems.

Mr, G. Thomas: Wait until my right hon. Friend says it.

Mr. Cooper: But the right hon. Gentleman's annual Budget speech is as certain, as regular and as obvious as night following day. We have only to look at last year's HANSARD to discover what he will say tomorrow. All he will do is to bring the figures a little more up to date. May I deal with the criticisms which the right hon. Gentleman will make tomorrow? If we are to produce more—and I do not believe that to be our basic problem—where do we sell it? This is something which never appears to occur to hon. and right hon. Gentlemen opposite. The easiest thing in the world is to produce. The most difficult is to sell. We can sell it quite easily in this country; that is not the problem. But if we do that and take all our production into domestic consumption in this country, our import bill will be increased substantially.

Mr. Thomas: We cannot sell it if we cannot produce it.

Mr. Cooper: I agree that there is a case for arguing on the line of the chicken and the egg, but I prefer it my way. We are probably one of the greatest international trading countries, and, as the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) rightly said, we depend for our very existence on international trade, and it therefore follows that we are affected directly and immediately by the vagaries of international trade. In the last year our problems have been accentuated by a shallow recession in the United States which led to a substantial decrease in the sales of motor cars. We also found that


trade in Europe was not quite as buoyant as in previous years, and that had its effect. Another important fact which my right hon. Friend did not mention but which has had some publicity is that in the primary producing countries, the prices of raw materials have declined during the past year, with the result that the sum of money available for imports into those countries has been reduced. This is starting to build up again. At the same time, the situation in the United States and in Europe is improving. The result is already showing itself in a certain buoyancy in our own economy. I do not think that my right hon. and learned Friend was at all incautious or pessimistic about the situation which may face this country later this year.
I was particularly struck a week or two ago by the unemployment figure, which I believe was one of the lowest recorded in this country at the March count. It had no regard to the fact that we are about to enter the summer season, in which a substantial body of men and women who are not normally employed or are unemployed during the winter months find themselves at work. I think it not improbable that towards the middle or end of August we shall find ourselves with an unemployment figure ridiculously low to the point of danger.
That may sound a heresy to some hon. and right hon. Gentlemen opposite, but what I mean is quite simply that we shall at that time have reached the position when virtually there will be no single soul left to be employed in this country. [Interruption.] If I may anticipate what the hon. Member for Glasgow, Govan (Mr. Rankin) will say, it is the question whether that applies to Scotland.

Mr. John Rankin: Yes.

Mr. Cooper: It may well be that there will be pockets in certain areas where what I am suggesting may not apply. He would be an extraordinarily brave, or perhaps a very foolish, man who would say that his remarks were applicable to the whole of the United Kingdom.

Mr. Rankin: Does not the hon. Gentleman realise that in Scotland all the pockets have holes in them?

Mr. Cooper: I do not know what that is intended to mean but, usually, when one has a hole in one's pocket, there is nothing there, and the situation in Scotland is not all that bad. It shows over the last few months a tendency to get very much better, and I suspect that as a result of the operation of the new export credit guarantees financial measures, together with the other provisions outlined by my right hon. and learned Friend the Chancellor today, some of the heavy industry in Scotland may well benefit over the next few months and years. Let us not always look on the black side.

Mr. Rankin: I agree.

Mr. Cooper: Last year, speaking about this time, I suggested to my right hon. Friend the Prime Minister that he should have consultations with industry on the management side to see whether a new export drive could be created, and whether we could do something to infuse new life into what has become—let us face it—a rather stagnant operation. I also invited the Leader of the Opposition and his hon. Friends, who, for all their little local difficulties, have very great influence with the trade unions, to see whether they themselves would take part in this exercise and would use their influence within the trade unions so that, if it were possible, we could get some of these restrictive practices reduced.
As the hon. Member for Stoke-on-Trent, South has so rightly said in other words, if the nation prospers we all prosper, but if it fails we all fail, and nobody in this country will be insulated from such a debacle as that. There fore, I hope that hon. Gentlemen opposite will use the influence they have in the trade unions to see whether it is possible to reduce these restrictive practices in order to help management in this great struggle which affects the whole future so vitally.

Mr. Ron Ledger: If the hon. Gentleman really wants us to help, I am sure that all my hon. and right hon. Friends will be willing to do so. Would he go further and give us one example of the way in which he wants to get rid of restrictive practices for which trade unions are responsible? I am asking him to give only one example,


so as not to put too large a burden on the hon. Gentleman.

Mr. Cooper: I will not be drawn into a long discussion on restrictive practices, but we have had, for example, a considerable number of strikes in the shipbuilding industry which have been inter-union strikes.

Mr. G. A. Pargiter: Where?

Mr. Cooper: The Cammell Laird strike is notorious, and the troubles there are still not resolved. I say to the hon. Gentleman opposite that a lot of the difficulties in the shipbuilding industry—and this is the primary reason why we have lost orders—have been due to the inability of the industry to deliver. I believe that that has been due wholly to labour difficulties. That is just one industry in which these things can be put right.
On the management side, we still have very many restrictive practices which have to be dealt with. I say to my right hon. Friend the President of the Board of Trade, whom I am glad to see here, that although the Restrictive Trade Practices Act is now working, in the view of many of us it is working far too slowly. There are so many industries which now have practices registered on the Registrar's books that it will be months, if not years, before they are dealt with. One difficulty is that it is still possible in present circumstances for new restrictive practices in management to be entered into.
I must declare an interest here. One is the British Hotels and Restaurants Association, which has introduced a new credit card scheme, which has been accepted by the Registrar as being registrable. It has the effect of being a serious agreement in that it opposes the use of credit cards in this country by that organisation by American visitors coming here. This is the sort of thing which ought not be be permitted while there is a Restrictive Trade Practices Act in force.
The task of our industry today is to produce goods in great quantity and great quality to satisfy an increasing population, which, nevertheless, is a decreasing producing population, with more children staying at school to a greater age, and an ageing population. The producing section of the community

is being compressed and is having to produce very much more. Coupled with this is the fact that we have lifted our standard of living in this country so high, and we intend to go further, that it demands a very large production to deal with our export requirements. The times in which we live are times of great opportunity, and also of great challenge. I believe that the incentives which my right hon. and learned Friend has introduced in this Budget will go a long way towards helping us to rebuild and revitalise our export trade, and I congratulate him upon them.

6.58 p.m.

Mr. John Rankin: I want to comment on one point upon which the hon. Member for Ilford, South (Mr. Cooper) touched. He referred to difficulties in industry and, of course, all of us on both sides of the Committee regret these difficulties.
I think he was not quite fair, however, in stating the position as it is in the yards today, because if he were more familiar with what is happening, he would realise that a good many of these strikes arise from the fact that employers do not consult sufficiently with their employees. Today, we cannot treat men in industry as if they were chattels. They are refusing to be treated in that way and, consequently, when changes, of which many of them as individuals may not disapprove, take place, which may threaten their future employment, they naturally want to know what safeguards they are to have. When these things are imposed upon them, then the employer is looking for trouble, and he generally gets it.
Looking at the Budget generally, I would say that it will be very popular with the Tories—

It being Seven o'clock, The CHAIRMAN left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business).

Mr. SPEAKER resumed the Chair.

Orders of the Day — TRUNK PIPELINES BILL

Second Reading deferred till Monday next.

Orders of the Day — WAYS AND MEANS

Again considered in Committee.

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Orders of the Day — BUDGET STATEMENT

AMENDMENT OF THE LAW

Question again proposed,
That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.

Mr. Rankin: I was just saying that the Budget will be popular with the Tories. The evidence for that was to be found in the welcome which hon. Members opposite gave the Chancellor today when he sat down. It was very different from the ones which he often received when he finished some of his performances on foreign affairs when he held the very important office of Foreign Secretary.
The Budget fits generally into the growing attitude within the Tory Party that as much as possible of State expenditure covering social welfare and other national obligations should be transferred from the State and put on the shoulders of the individual. In my view, this is merely a beginning, and the process which has started today will be extended in further Tory Budgets.
That view is reinforced by the fact that in the Budget the Government have taken two very wide powers. We are to some extent to be governed by Statutory Instrument. In my view, that hits at the idea of democratic government, because we cannot discuss a Statutory Instrument in the same way as we can discuss a Government Measure brought in in the usual fashion.
The second power deals with the surcharge on employers, and that is one which may hit Scotland very badly indeed. If the provision for a tax of 4s. placed on an employer to cover those employees who might, in the view of the Government, be released for work elsewhere, is applied rigorously in Scotland,

it will merely result in increasing the numbers of those who are already unemployed. Because of that, I am sure that the new power will be regarded with great dissatisfaction among trade unionists and other members of the Scottish community.
This attempt to transfer obligations from the Government to other sources is recognised in the White Paper to which the Chancellor referred, which covers the financial and economic obligations of the nationalised industries. I should like to ask the Financial Secretary whether or not the Ministry of Aviation is among the nationalised industries, because our airports are nationalised and yet there is no mention of them in the White Paper, and no reference to them in the table of financial results shown at the back of the White Paper. The charges at the nationalised airports—the landing fees and so on—are a matter which engaged the attention of the Minister of Aviation a few weeks ago.
I hope that the Government will utilise this White Paper with the very greatest care. B.O.A.C. and B.E.A., in which I feel a special interest, and in which many hon. Members are also specially interested, are in a position somewhat different from any of the other nationalised bodies. They deal in a foreign market. All our other nationalised organisations are concerned largely with buying and selling on the home market. The two Corporations, one of them international, and the other European and extending somewhat beyond Europe to the Middle East, are, therefore, in a different position. And when we come to judge them we have to think not merely in terms of finance but in terms of the job which they have done.
Those of us who are familiar with the work of B.E.A.—all of us, I hope—will pay tribute to the immense expansion which it has carried out during its fifteen years' existence. On my route, only fifteen years ago we were flying in the little D. H. Rapide from Renfrew to London, and the aircraft was able to carry only five, and that was then a crowd. On 1st April this year the Vanguard started, carrying 150–160 passengers. Whereas fifteen years ago it took us 3¼ hours to do the journey from Renfrew to London, now we are doing


it by Vanguard in an hour and five or ten minutes.
All that new technique had to be introduced quickly because of the competition, about which hon. Gentlemen have talked so much, from places outside the United Kingdom, with the result that, having to spend so much on equipment, and having to spend it so rapidly, the Corporation had little chance to collect the resources on which the Chancellor is now basing what I do not deny is a legitimate demand.
It had to equip itself quickly and expensively, and the latest addition to the fleet is a machine that costs £1 million. These things have to be kept in view. I hope that the policy enshrined in the White Paper will not be applied to harshly.
The British Overseas Airways Corporation is in an even worse position. Up till recently, it was competing against American competitors who were being heavily subsidised. Pan American World Airways was granted about 100 million dollars each year by the American Government to gather up, off Cape Canaveral, the failures projected into the air in order to try to keep pace with Russia. That was a subsidy, and that is what B.O.A.C. had to compete against.
B.O.A.C. is in an international market which is heavily competitive, but the balance of revenue account and the general reserves show that it is fighting back despite the difficulties of the past fifteen years, with the intensive competition not only from outside but the competition now being fostered by the Government in its Civil Aviation Licensing Act, which could also adversely affect the nationalised Corporations.
If we are to subsidise the private operator, as we are doing indirectly, then we shall make it still more difficult for B.E.A. and perhaps B.O.A.C. to produce better figures. I do not think that anyone will dispute that the private operator is being helped, because the shipping companies are behind many private operators and the shipping companies are being subsidised by the Government. Today they were given a guarantee by the Chancellor that their subsidy would not be touched for at least another year. Whether we could regard that as a Budget leak I do not

know, but it is rather an unusual type of guarantee.
The Chancellor spent some time in examining the scope of the economy during the past year. The Committee will have noticed that when the Economic Survey for 1961 was produced, the Economist described it as a
…curiously rambling and imprecise affair.
The Spectator went a little further. It asked
have you ever seen such a frightening mess?
The New Statesman said
The Survey gives no hint that Mr. Selwyn Lloyd either plans or expects to do much to restore health to the British economy.
If he cannot restore a measure of health to the economy by the enormous powers he is to take, then indeed the Government will be in much worse shape than they appear to be at the moment. The hon. Member for Ilford, South emphasised our complete dependence on one great country, the United States. It is a terrible thing that we should hear that from a Member opposite.

Mr. Cooper: The hon. Member must not misrepresent me. I talked about the United States, Europe and the world as being trading associates. I said that if trade fell away in any one of them, it affected us.

Mr. Rankin: The hon. Member should be glad that I misrepresented him. I apologise to him, but it gave him another chance of coming back into the debate. The Chancellor also had his say in the Economic Survey. Paragraph 28 on page 10 of the Survey says
…for a country in the international position of the United Kingdom, it is axiomatic that the growth of the economy must be interlocked with the growth of exports—otherwise the balance of payments situation is bound to frustrate growth and force a reversal of direction. Endeavours by Government and industry to foster the growth of the economy will succeed only if they are also designed to improve the country's competitive power. Growth and competitiveness can never be separated.
A lot of speeches are contained in that paragraph, but I propose, for the satisfaction of both sides of the Committee, to make only one of them tonight. How has the growth of industry been carried out during the year since we heard the former Chancellor


present his last Budget? Whenever I look back at previous Budgets, I often wonder how much Chancellors really know about what will happen and how much they are chancing their arms. The figures of industrial growth are given in paragraph 29 on page 20 of the Survey.
In the first quarter of 1960 the index figure was 120—taking 1954 as 100. In the second quarter it was 121; in the third quarter it was also 121; in the fourth quarter it was again 120. That was an average over the year of 120. Thus, industrially we finished 1960 exactly where we started it. In the last six years there has been an increase in production of 20 per cent. which, if my arithmetic is correct, is an average of 3⅓ per cent. per year. In Germany over the same period the increase was 62 per cent., in France 52 per cent. and in Japan 108 per cent. We neither had growth comparable with other countries, nor, lacking that, did we have the competitiveness which the Chancellor told us today was essential for the development of our industrial position.

Mr. William Clark: Mr. William Clark (Nottingham, South) rose—

Mr. Rankin: I do not mind giving way provided I am not charged afterwards with making too long a speech.

Mr. Clark: I am following the hon. Member's argument with great interest. Will he say, at the same time, whether those countries have full employment?

Mr. Rankin: I cannot answer that question by producing statistics in the same way as I can produce statistics with which the Front Bench has kindly provided me. As far as I know, however, the industrial position in those countries—and I have been in two of them—concerning employment is, if not better than ours—

Hon. Members: It is worse.

Mr. G. Thomas: West Germany has full employment.

Mr. Rankin: There is plenty of time. I am in no hurry if those on the benches opposite are in no hurry. My information is that the employment position in Germany is better than it is here. If that is wrong, I am sure that statistics

disproving what I say will be produced during the debate. That is the position as I understand it. Therefore, both on the growth of industrial production and on the issue of competitiveness, the Chancellor's case as presented in the White Paper has not materialised over the past year.
Let me turn to another aspect which is shown on page 13 of the White Paper, where, to some extent, we are consoled for these failures because we are told that during the year wages and salaries have increased by £930 million. The White Paper, however, does not go far enough. It does not tell us how many persons were affected. We are shown by other Government returns that this number is nearly 25 million.
When one brings that increase in salaries and wages down to figures per head per year, the average increase in wages, of which we have heard so much, works out at £37. When we recollect that within that wage and salary earning group are people earning salaries of £5,000, clearly there must be a considerable number of people in our economy at working-class level who have not had anything near the 15s. per week rise which the Government claim to be widespread.
Another problem contingent upon the one with which I have been dealing concerns the other type of employee. This is dealt with on page 46 of the White Paper. These are the people who draw their incomes from self-employment and from rents and dividends. We find that during 1960, their gross increase was £359 million. When we realise that there are a million and a half of them and that on this basis the average increment for this section of the community works out at £240 a year, we see that not only do the Government in their survey show that they have failed to increase exports and failed in production and in competitiveness; they have also shown a lack of fairness in distributing with a reasonable measure of equity the resources which have been produced.
Today, the Chancellor referred to investment. He used a careful phrase. He said that the rise in new house building, taking both public and private building together, had been quite good. If, however, we take public and private


house building separately, we are shown by table 9 in the White Paper that the output of public authority houses has fallen by £4 million. It is those authorities who, as in my constituency, are trying to house people who have been waiting twenty years for new houses. According to the White Paper, however, 1960 saw a fall of £4 million in the output of public authority houses, whereas the private speculator has increased his output by £56 million. It is not strange to me that the Chancellor lumped the two types of building together and said that the year had been successful. It has been a successful year for the private developer in house building.
If we consider other new work, the public authorities have been compelled to reduce their output by £3 million, but the private developers, on the industrial side and in what is called the miscellaneous side, whatever that may be, have increased theirs by £79 million. Thus, not only is there a disbalance in the distribution of products; there is also a disbalance in regard to the purpose for which output of house building is being used. Both of these things are wrong. The Government axe carrying out a policy which rests upon the private individual whose aim is to make profit and to create wealth for himself and not for the community. The Budget will encourage that system to grow and it will grow at the expense of the rest of the people, most of them in the working class.
Because of those reasons, because the Government are not governing on behalf of the country as a whole, this is a Budget which does not have my approval and a Budget which, I hope, we will oppose by vote when we come to decide about it on Thursday.

7.29 p.m.

Mr. E. H. C. Leather: I find it difficult to follow the hon. Member for Glasgow, Govan (Mr. Rankin). I listened spellbound by the incisiveness and clarity of his argument, but I found it a little difficult to get the point of it. As for the league table statistics which the hon. Member gave us, which, obviously, he has taken from the speech that his right hon. Friend the Member for Huyton (Mr. H. Wilson) is to give us tomorrow—

Mr. Rankin: On a point of order, Sir William. Is it in order for an hon. Member to accuse me of theft? In fact, there is more to it than that. The hon. Gentleman is accusing me of the theft of something which has not yet materialised.

The Deputy-Chairman (Major Sir William Anstruther-Gray): I did not take the hon. Member's remarks as going as far as that.

Mr. Leather: I thank you for your protection, Sir William. I hope that I will not need to ask for it again.

Mr. Rankin: It is I who need protection.

Mr. Leather: The answer to the hon. Gentleman's point has been given on many occasions. He has used the production statistics of Germany, France and Japan. If he used similar statistics for countries like Canada, Australia and the United States of America, he would prove precisely the opposite. We know the situation. One starts from a different base. One starts with a devastated industry which a kind victor completely reforms and presents to one with written-off capital charges. I wish that somebody would set me up in a business like that. I would show him something then. The whole basis of comparison is wrong.
I mean no personal disrespect to the hon. Gentleman but I could not help feeling that he, like the right hon. Gentleman the Leader of the Opposition, trotted out the old story about stagnation, and all those who use these figures must have carefully studied that great classic work in economics "How to Tie with Statistics".

Mr. Rankin: I was using the Economic Survey for 1961 which was produced by the Government. If there are mistakes in my argument the mistakes are in the Survey.

Mr. Leather: The hon. Gentleman misunderstands me. What I am talking about is not the arithmetic of the figures, but the conclusions drawn from them. That is where he is wrong. The Leader of the Opposition said, in reply to my right hon. Friend, that British industry was stagnating. He also said that we had more employment this year and that we would get lower production and,


therefore, the stagnation was worse. This is not true, for one simple reason. There are more people employed in British industry, but not in British manufacture. I put this point seriously to the hon. Gentleman, and, indeed, to my hon. Friend the Financial Secretary, because Ministers are sometimes inclined to give false impressions.
I believe that the primary reason why these production statistics, which, after all, were designed ten to fifteen years ago, have, over the last two or three years in particular, shown up such a depressing picture, which is belied by the evidence of one's eyes every day of the week, is because they no longer apply to our situation.
We have passed into what the Economist calls a service economy. We have passed the point, as the United States, Canada and Australia have done, where less than 50 per cent. of our population is employed manufacturing things. We have had a vast increase in the service industries which only the most highly developed and prosperous societies can afford. It is only when one becomes prosperous on a wide, national scale, as we have in this country, and no doubt even in Scotland, that one can afford many of the industries which we have nowadays.
Consider the position in any town or city. The increase in the number of restaurants in the last two or three years has been fantastic. There are now more people providing services, and they are not shown in the production statistics. Experience in Western Europe shows that one reaches a point—which the United States of America reached about ten years ago and we reached two or three years ago—where the whole nature of the total value of the national product changes, and more than 50 per cent. of the people are employed profitably and make contributions in taxes to the welfare of the State, but not in manufacturing. The vast tourist industry is another good example, but none of these activities is shown in the production statistics. I therefore believe that the statistics give a false impression of the true state of affairs.
My answer to anyone who talks about stagnation over the last few years is that one only has to look at one's constituents, at the new cars on the streets, at

the new shops being built and at the quality of the goods in people's houses, to know that that whatever else they were doing they were not stagnating. They were becoming more prosperous.

Mr. Rankin: Does the hon. Gentleman not agree that those are the things which are causing the disbalance in our balance of payments position which causes the Chancellor of the Exchequer so much trouble?

Mr. Leather: That is true to a certain extent. We would have no problem of balance of payments, and Britain would have the most colossal gold reserves anybody ever dreamt of if the living standards of our people had been kept depressed, but the party opposite cannot have it both ways. The hon. Gentleman and his hon. Friends have been making much of the dreary, dismal, state of the poor depressed people under this "wicked, exploiting" Tory Government. The hon. Gentleman now acknowledges my point. Our exports rise every year. Last year they rose by 6 per cent., which was a great achievement because of the setback in the United States of America. Our demands have risen even higher, and this is due to the immense increase in the living standards of the broad mass of our people.
I turn now to one or two detailed points in the Budget. I welcome, and I am sure that we are unanimous in this, the reliefs which my right hon. and learned Friend has given to the victims of Nazi persecution. While, normally, I thoroughly disapprove of retrospective legislation, in this case I welcome most warmly and sincerely not only the gesture but the fact that it has been made retrospective. One feels that there is here a touch of warmth and humanity such as we have not seen from the Treasury since my right hon. Friend the Leader of the House left it a good many years ago. I can recall some friendly touches when my right hon. Friend was at the Treasury some years ago. We had all-night sittings, but he managed to do a number of kindly things and it is only fair to remember them.
I am grateful, also, for the relief given to some of the clergy. I am sorry that the case of the Easter offering has not been put right, but I hope that hon. Members know how to deal adequately with that matter between themselves and their local vicar, as I have done for many years.
I am intrigued, and I confess that I did not entirely understand what my right hon. and learned Friend said about the overseas tax reliefs. I hope I understood him correctly, that in future tax reliefs given in overseas countries would be allowed in full by the British Treasury. This is something about which those concerned with investment and trade in Commonwealth countries have been annoyed for many years. My hon. Friend the Financial Secretary will remember that during our discussions on the 1956 Finance Bill I had the good fortune to move the Amendment dealing with overseas trade corporations, which first got some concessions out of the Treasury.
To take the most striking case, the tax holidays allowed in the West Indies are affected by this. I want to refer to this, because the lessons to be learnt from this have so far gone over the heads of hon. Gentlemen opposite. The Governments of all the West Indian islands have the terrific problem of raising the living standards of their people and they have all been wise enough to realise that the best, the quickest, and the most economic way of doing that is to give every incentive that they possibly can to capital and management, which will then do the job for them.
That is exactly what is happening. In most of the West Indian islands and other parts of the Commonwealth capital and management can get a deal that no Tory Government in this country would dare suggest. The party opposite would have apoplexy if it were suggested. They can get a ten years' tax free holiday. They can have the whole of their profits without paying tax for ten years. Why? Because the Governments know that that is the quickest and best way to attract capital, develop industry, and raise the living standards of their people.
It has long been a complaint of ours that Whereas foreign companies going into the West Indies and other countries can get the whole benefit of this tax free allowance from money earned, in Jamaica, for example, and put it into their own pockets, and that this is an incentive, up to now the British Treasury has stuck by rigid principles and confiscated the lot in the interests of equality, so it says, but of a kind which has always eluded me.
I hope that I am right that the Clause in the Finance Bill which the Chancellor proposes will now put that right and that whatever is earned in an overseas country, and the overseas country does not tax it, the Treasury here will allow the company to get the benefit and not take it away from it and completely nullify the effect of what was intended.

Mr. Sydney Silverman: The Chancellor did not say that?

Mr. Leather: If he did not go all that way, I hope that my hon. Friend will tell us clearly how far he did go.

The Financial Secretary to the Treasury (Sir Edward Boyle): We shall have a full opportunity to discuss these matters when we come to the Finance Bill, but I think that I ought, in fairness to my hon. Friend, to say that the Chancellor's proposal was more limited than the suggestion often made in this House, which my hon. Friend has just been putting forward.

Mr. Leather: lam sorry to hear that. Perhaps my hon. Friend will mobilise his arguments for the Amendment which will be put down on the Finance Bill when it comes before us. Until that principle is admitted, particularly in dealing with associated companies instead of branches, many of us will not be content or will not admit that the Government have fulfilled the pledges given by the Prime Minister when he first agreed to overseas trade corporations legislation.
Before I leave the argument of the hon. Member for Govan and the question of statistics and the size of the revenue I should like to say that, on balance, I welcome the Budget. I think that it is a good and courageous Budget and I am quite prepared to support it. It contains tax increases of about £80 million. I am not convinced that these tax increases are really necessary. We are now at a stage where we have a gross national product of about £26,000 million. We have a Budget of about £6,000 million and we are apparently budgeting for a surplus of over £500 million on current account.
We are seriously told by experts from the Treasury, and by those who write for the Economist and the Guardian and other learned papers, which I do not


pretend to understand, that they can calculate to a nicety that £20 million this way or £30 million that way will be inflationary or deflationary. At the end of the year they have to admit that they cannot even get their sums right to within £300 million. If they cannot do that how do they know that £20 million, £50 million or even £80 million will have the slightest effect on the economy one way or the other? With the greatest respect to my hon. Friend, I suspect that this is expert humbug and I shall want a great deal of convincing.
If we are to have tax increases at all these are comparatively pointless. I am not convinced that they were even necessary and I do not think that there is anything in the arithmetic to convince anyone Chat one can positively say that £80 million will be deflationary. I do not believe that even my hon. Friend knows, and I give him credit for a good deal of skill on this subject.
Finally, I turn to what is, I think, the most controversial issue in the Budget, the main question of the changes in Surtax. My right hon. and learned Friend said early in his speech that the No. 1 priority which he had to face was the expansion of our exports. He said, later, that we needed to be kept in a keen competitive position. The Leader of the Opposition agreed with it. What can we do about this? If both sides of the Committee accept that better exports are what this country needs, and what we all want, how do we go about it?
It was said by the hon. Member for Govan that we had long got past the stage when exhortations would do any good. We have had fifteen years of that and it has worn itself out. The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) spoke at length on what he chosed to call his national plan. I think that when he has succeeded in selling his national plan to the great vested interests, primarily the trade union movement, we can then perhaps discuss it seriously here. I do not think that wage control and those things inherent in what he said are taken seriously as ideas for increasing the country's exports.
Whatever we do we cannot force foreigners to buy our goods. Therefore, I believe that the method of exhortation

is useless. The method of national planning, or of any kind of nationalisation or control, is quite irrelevant to this problem and cannot possibly contribute to the solution. What else can we do? We have the services of the Board of Trade and, in my view, most of them are extremely good. There is that excellent organisation, the Exports Credit Guarantees Department—to which some of us paid tribute again only last week—with its new measures. I have some personal experience of this and I believe that there is no serious criticism of them which can be made at this time. As I would expect, and I believe that most people would expect, the financial institutions in the City of London rose to match the new facilities of the Export Credit Guarantees Department and announced their new measures within 24 hours. But those things have been anticipated and steps taken.
I am not one of those who believe that the Government can do more by practical help, by exhortations, credit or financial facilities. If anything more of substance can be done I have yet to hear of it, and I probably know as much about this subject as anyone else. I believe that the only practical step that the Government can take is the one which they have taken. The only big incentive is to allow people to keep the fruits of their own labour. There surely can be no argument about this. We have not heard today about the retired bachelor, who had £100,000 a year unearned income, who played such a famous part in our debates a few years ago—although, at the end of the Finance Bill, no one succeeded in finding out who he was.
We are talking in this debate only about earned income. We are talking about the fruits of one's own efforts. Surely the basic position is clear. Hon. Members opposite are very keen on talking about social justice. If a man does a good and honest job; if he carries immense responsibility and works hard and displays a great gift of leadership; if he goes out and brings back hundreds of millions of pounds worth of business to keep the workers in his factory busy and to help the country, is it socially just to confiscate 50 per cent., 60 per cent., 70 per cent. or 80 per cent. of every penny he earns?

Mr. S. Silverman: I am following the hon. Member's argument closely. He is defending the Surtax proposals as providing a just incentive to the export trade. I cannot understand why the Chancellor should limit his Surtax proposals to the export trade. If the proposal is to cover the whole range, why is it an inducement or reward to a man for devoting himself to the export trade rather than to the easier job of selling in the domestic market?

Mr. Leather: Perhaps the hon. Member will put that very interesting debating question—to which he knows the answer quite well—to his hon. Friend the Member for Sowerby (Mr. Houghton), who is sitting on the Opposition Front Bench, and who will explain to him the great principles of equity in our tax system.

Mr. Silverman: I am not talking about equity, I am talking about money.

Mr. Douglas Houghton: I am grateful to the hon. Member for Somerset, North (Mr. Leather) for his reference to me, but I have nothing to explain to my hon. Friend. I am waiting for the hon. Member for Somerset, North to explain how he expects this relief which is coming to 350,000 Surtax payers with earned income to reflect itself in a boost to our export trade.

Mr. Leather: I am doing my best to make the point clear. I am sorry if the hon. Gentleman does not get it.
I prefaced my argument by saying that I believe the only course of action left open to the Government is in the sphere of personal taxation and incentive. The figures are thoroughly well known to everyone and have been for many years. In this country if a man is in a position of responsibility, earning £3,000, £4,000 or £5,000—for such positions I do not think that anybody will argue that that kind of remuneration is unfair; such work will not be done for less—and if he works harder and puts in a greater effort, he is lucky if he can keep 5s. or 6s. in the £ of the money he receives for his additional effort.
Were he a German, an American, an Australian, an Italian, or a Frenchman he would get 8s., 9s., 10s. and perhaps as much as 12s. in the £ for his additional effort. In this country the money is confiscated.

Mr. Houghton: Mr. Houghton indicated dissent.

Mr. Leather: I see the hon. Member shaking his head, but I have here the figures relating to earnings above £10,000 a year. The ordinary Englishman is allowed to keep 4s. 9d. in the £ of the next £1,000. The comparable figure for an American is 10s. and for a German 10s. 6d., which is more than double.

Mr. Ledger: Mr. Ledger rose—

Mr. Leather: No, I cannot give way again. I have been interrupted a great deal and I do not wish to detain the Committee.
I have talked about whether it is socially just to confiscate this amount. I do not believe that it is. But, to put it on a lower plane, from the point of view of sheer self-interest is it wise to do so? Do we really achieve anything of value by taking away so much of people's earnings that we deliberately put on a brake and make it difficult to find people to fill positions of responsibility?
This concerns far more than the 350,000 people to whom reference has been made. It concerns all those others who ought to be sweating their guts out to achieve those kinds of positions. But many will slow down and say, "It is not worth it"—and one cannot blame them for saying that. They are not to be allowed to enjoy the reward for their labours. It seems to me that anything which allows them to keep a bit—not a substantial bit, but just a bit—more of the reward for their own labour is not only socially just by all the definitions used by hon. Members opposite, but is highly desirable in the interests of the country if we wish to get more dynamism and more steam into the British economy.
My hon. Friend the Member for Ilford, South (Mr. Cooper) referred to us trying to do too many things at once. Undoubtedly, that is true and it has been acknowledged at various times by hon. Members on both sides of the Committee. It has been one of our weaknesses. We have all such great ambitions and desires that we have tried to do everything at once and that has frequently overstrained our economy. There have been substantial improvements in nearly


every Measure for the Welfare State over the last few years. Not enough, of course. It is never enough. We could always wish for better pensions, more public assistance and more schools. But surely it must be agreed that tremendous strides have been taken over the last ten or fifteen years and that Governments of both parties can share the glory.
We all want to do more, and surely the best way to do that is to create greater wealth, which can then be shared. The more production we have, the more we can build up the strength of our economy, the more we shall be able to afford the welfare benefits which we should like to provide for the poor, the aged, and those who have fallen by the wayside. I believe that the measures which my right hon. and learned Friend has taken represent a substantial step towards giving our economy some dynamism which will produce more wealth, if we have patience for a year or two to enable the economy to get into top gear. Then we shall be able to do more and afford more with less effort from everybody, and that will be to the good of the whole country.

7.56 p.m.

Mr. G. A. Pargiter: I listened with interest to the peroration of the hon. Member for Somerset, North (Mr. Leather) about persons receiving the fruits of their own labour. That has been a good Socialist principle for a long time. The trouble is that so many people are living on the fruits of the labour of other people. When the hon. Member talks about someone who goes and brings back millions of pounds worth of orders and so on, we must remember that such a person does not now exist. What is achieved is part of the collective effort of industry as a whole. The individual cannot sell something which is not there or something which is of no use. His individual efforts are only part of the whole and the sooner we treat everyone as part of the whole and provide them with an adequate reward the sooner we shall see a considerable change in industry and in the economic structure of the country.
It was interesting to hear the rather ingenuous way in which the Chancellor commenced his Budget speech. He gave us his idea of what he would like to do at the Treasury. But when he got there

he found how difficult it was to change things. He found that there were some things which could not be done. FOR example, he found that a capital gains tax would be far too difficult to apply. The fact that it has worked for years in America does not seem to have provided any lesson for this country. We can learn many lessons from America, but that does not appear to be one of them. But, of course, when it comes to the question of a payroll tax—something which might be thought very difficult to apply—it is surprising to find that it can be slapped on overnight.
I do not accept these arguments that things cannot be done or that the structure of our Income Tax and Surtax could not be altered and simplified if the Treasury chose to do so. The fact is that there are some ingenious people at the Treasury, and, by and large, whatever a Government want as a matter of policy they can get—so we do not want to hear arguments that these things cannot be done.
It was interesting to listen to what was said about this payroll tax, or employer's surcharge as it is called, because it is not an employer's surcharge at all. It will be a charge on industry. I do not know what effect it will have on British exports. Those of us who know anything of industry know that it is not possible to take people and drop them down in some place where there may be employment for them due to some temporary fluctuation in trade. That is fantastic. The hon. Member for Somerset, North referred to the number of people employed in providing services. The problem is that the structure and nature of industry is changing all the time. There will always be an increasing number of non-producers compared with the actual producers and it will be interesting to note the developments which will follow the imposition of this payroll tax.
For instance, one cannot suddenly run a bus with less than two people operating it. One can try, but it will be a job to run a double-decker bus with less than two people. One can run a single decker bus with one person and a good deal of that is done. If the stand is to be taken that there will be a tax on the number of people employed, its effect will be not to decrease to a large extent


the number of people in the employment of any industry or firm. It will be to increase the general cost to the industry. Perhaps the Government will be satisfied with that, but it does not seem to tone with their exhortation and desire to cheapen the cost of exports so that we can more effectively export and compete with European countries.

Mr. E. Fernyhough: This is a very roundabout method. If the Government were anxious at certain times to make wages costs rather higher, all that they would need to do would be to ask the trade unions to apply for an increase and the effect on employers would be precisely the same as the payroll tax.

Mr. Pargiter: I do not think that the effect would be quite the same. The effect of a payroll tax is to bring some additional money into the Treasury. The effect of an increase in wages would probably be to increase expenditure to some extent, which I gather is another thing which the Government are not particularly anxious to do.
It will be interesting to see how the novelty works, because I cannot see it achieving the object the Government have in mind. We are no longer at the stage in industry of having two or three people employed when one of them could be dropped quite easily. The complicated machine of production is such that it is not easy suddenly to say that in one week 5 per cent. fewer workers are wanted than were necessary the previous week. In places like Scotland, South Wales and certain other parts of the country, where they are probably employing men in some cases less usefully than they need, the tendency will be to increase the amount of unemployment. Where there is already a satisfactory labour market, the effect will be to increase the amount of unemployment. In areas where there is a scarcity, an employer will chance this impost and pay it. He will charge it against his product, if he can, and there will not be a change in the flow of employment. If underemployment exists, as it does in some cases, I am satisfied that the payroll tax will not change the pattern. The nature of industry in itself will prevent it doing so. I do not know whether it will have the effect of closing down some of the restaurants to which reference has been

made, but I do not regard that as a very serious matter with which we should be concerned.
We have heard much about the necessity for incentives. We are told that Surtax is a tax on incentive. We have heard that the relief is to be limited to earned incomes. It will interest me, as I am sure it will interest the Financial Secretary, to know how long it will be before the clever boys get busy and decide how unearned income can become earned income. I can think of one or two ways in which it can be done. I have no doubt that some people will think of them much quicker than I did. It will not be long before we shall find that the amount of unearned income in these brackets will be considerably decreased and the amount of earned income considerably increased. I shall be interested to hear what measures the Treasury has to deal with that situation.
We have heard about technicians and supervisors and all the people who help to get production going, but amongst the people who should receive some consideration are those in the £1,000 to £2,000 a year class, of whom there are vast numbers. They are vitally important in considering the question of incentives to production. They are more important than high-powered salesmen. A high-powered salesman has to sell what other people produce. Whether he does it efficiently or otherwise may have a marginal effect, but the fact remains that the article has to be competitively produced. If there is to be an incentive, it should be given to the people in the £1,000 to £2,000 a year class.
At least the Chancellor of the Exchequer will go down in history as having broken the sound barrier of Surtax. His feat will not compare with the achievement of the Russians in their space flights, and I am not sure that it will be received with such universal approval. However, he has done this, and he has done it on specious grounds. He has done what people on this side of the Committee said that he intended to do. We said that his object in increasing the Health Service charges was so that he could nicely balance a reduction in Surtax. I have no doubt that that will be denied and disclaimed, but it is interesting that the figures so nearly


balance. They will satisfy the Treasury, at any rate. It has given away £58 million and has a compensating figure without any material trouble.
My right hon. and hon. Friends and I think that it is completely immoral and wrong that people in high income groups should receive benefits because of the national conditions generally, whilst the poorest sections of the community are mulcted for further payments. It is one of the things which we on this side will be most strongly opposed to.
There are other factors. For example, a vehicle tax on commercial vehicles is hardly an incentive to production. This is altogether apart from a vehicle tax on private cars. Transport enters very largely into costs of production. That is recognised on all sides. If the cost of transport is increased, the cost of production will be increased. If the cost of production is increased, the cost of exports will be increased and our chance of exporting more will be reduced.
The underlying thought of the Chancellor of the Exchequer in this is that it is a long time since there was an increase in this tax. What an approach to taxation that is. The right hon. and learned Gentleman's argument is that, because it is a long time since there was an increase, it is time the tax was increased. It has not been examined from a proper point of view. It could well be argued that the relative positions of oil and coal have changed to such an extent that an increase in the tax on heavy oil is justified, but the same argument cannot be applied to an increased tax on vehicles. If the general desire is that costs should be kept down, it is surprising that this tax has been increased.
Instead of the Budget being a general Budget of incentives, as we were led to believe was necessary in the country's interests, in order to encourage a greater measure of production and so that our export industry could flourish, there is virtually nothing in it which can have any material effect on the export drive. It is in direct line with the general Tory philosophy, which is to reduce direct taxation and increase indirect taxation. There is nothing strange about it. The

Chancellor of the Exchequer has not introduced any new principles from that point of view. He is merely pursuing a policy which will undoubtedly be applauded by hon. Members opposite and by his supporters in the country, at least to some extent, although I imagine that some of them will have second thoughts on the question of the 10 per cent. surcharge or rebate which is to be used as a matter of flexibility. Some Government supporters will want to learn a good deal more about how the 10 per cent. is to work.
One of the problems of Purchase Tax and similar types of taxation is that of taxation on existing stocks. One of the great complaints about Purchase Tax is that when changes are made they have the effect either of increasing the value of stock or decreasing the value of stock at any one time. A 10 per cent. surcharge which could be slapped on all types of goods at any time, perhaps within a week, would certainly have a considerable effect upon trading turnover and the stocks carried by traders, especially as it would operate at the lowest level, at the point between the retailer and consumer. If it is not put on at that level, it will not be much good. It will be no good putting it on at any other level, because the Government will never be able to calculate how it will be paid. I am not sure now how the Treasury will calculate this tax and the amount to be paid if it is to operate quickly and efficiently.
This is a most significant admission that the Government's monetary policy has failed. Their policy of high rates of interest attracts undesirable money to the City—hot money, unreliable money—which increases the overall burden on the economy by increasing the cost of investment and the cost to the nation of the service of the National Debt, which has again gone up by many millions of pounds. This is an admission that that method of dealing with our economic problems, and of deciding whether the economy is outrunning itself or wants stimulating, has failed.
Instead of having restrictions on hire purchase, and the like, there is to be an imposition rising to 10 per cent. It is an interesting innovation, and I should like to know how it will work. I hope that we shall get a fuller explanation,


but this seems to be an extraordinary thing to introduce now.
Our trade balance has worsened over the year, and there is nothing in these proposals that will mend it. Apart from the incentive to Surtax payers, the things that have been done would appear to lead to increases in the cost of production. If we are to have an increase in the cost of living of up to 10 per cent. wage claims will follow, and we shall not easily get rid of the inflationary spiral. As a result, I think that we shall see the complete bankruptcy of Tory financial management, and then, perhaps, we may return to saner days.

8.13 p.m.

Mr. T. H. H. Skeet: The hon. Member for Southall (Mr. Pargiter) denied the extraordinary impracticability of introducing a capital gains tax, and referred to the tax in the United States. I would point out, however, that in the United States the tax is operated without a Stamp Duty which, in the United Kingdom, brings in £59 million a year. I assume that that would have to be abolished. In addition, we are told in the Royal Commission Report that the next gain from the tax, taking into account profits and losses on the year, would be about £50 million.
The hon. Gentleman also referred to the payroll tax on industry. Curiously enough, that has been introduced in order to provide economy of labour—[An HON. MEMBER: "Unemployment"]—no, not unemployment. If we look at the West German Republic today, where there is a payroll tax of 0·2 per cent., as has already been mentioned we find that there is now full employment although this was not so a little while ago—

Mr. S. Silverman: Will the hon. Gentleman explain to me? Economy of labour means not employing more labour than one needs, and that means that there must be a surplus of labour. What becomes of it?

Mr. Skeet: It may be desirable for industry to move labour around a little to that part of the economy—the export trades—whore it will be of the greatest value. That is perfectly true in a place like Birmingham—

Mr. Silverman: Pure mysticism.

Mr. Skeet: People are constantly talking about the miracle achieved in Western Germany. There they have achieved economy of labour in two ways. The first is by very heavy impositions on the employers for the payment of the national welfare charges. For example, for old-age pensions and disability insurance there is an imposition of 14 per cent. half payable by employers and half by employees. In respect of health insurance, each side of industry pays between 3½ per cent. and 4½ per cent., and there are other impositions. Coupled with that there is what is called the payroll tax or duty.
As I see it, the payroll tax could be operated as it is in Australia. In order to encourage the export industry a rebate is made. Here if there is unemployment in certain parts of the country it may be necessary to have a rebate of the levy. After all, we have been told only this afternoon that there is to be a payroll tax. We do not yet know its form, but Her Majesty's Government have indicated that, above all else, they will continue to support a policy of full employment. When one has full employment then, as a temporary expedient, a tax like this may prove rather useful in getting mobility of labour—

Mr. Pargiter: Do I understand from the hon. Gentleman that this tax will be so selective, and that such careful surveys will be made that in particular industries, or even sections of an industry, that the Chancellor will be able to put the tax on that section, and offer a rebate to another section of the same industry? That certainly does not appear from the Budget Resolution. In fact, the precise opposite appears to be the case; that it is in respect of all persons engaged in industry. I see that the Financial Secretary nods his head, and I am fairly certain that that is the intention.

Mr. Skeet: I am obliged for that interruption. So far, we have been told what it represents only in broad outline. It can be selective, as in Australia, and one could have a rebate to give an incentive to the export trade. It might be quite practicable in the United Kingdom, where we have a tight labour situation in certain parts, to have a payroll tax in operation. Where there was current or potential unemployment in another


part, it might be possible to have a rebate of the tax. When we see the distinctive terms of the proposal we shall have a clearer view of its possibilities. The Leader of the Opposition said this afternoon that, apart from the one point that operated in his mind, such a tax should not be ruled out altogether.
I want to emphasise that not just two but more countries have been experimenting with this idea, and an authority in the banking world, Sir Oliver Franks, said earlier in the year that it could be a valuable instrument for getting mobility into industry. It would also persuade many industries to automate more, to introduce fresh techniques, and so forth. Nevertheless, it is Her Majesty's Government's policy to have full employment, and with employment as it is now I do not think that, as a temporary expedient, a payroll tax could lead to any great disadvantage.
The hon. Member for Southall taunted the Government with raising the Surtax limit, but my right hon. Friend plainly indicated that the cost of that would be offset by a heavier Profits Tax. Hon. Members opposite should refer on this subject to what has been said by the hon. Member for Bosworth (Mr. Wyatt), who is not now in the Chamber, and also to what Lord Lucas said in another place. I shall quote exactly what he said about this. He said:
I said from the Front Bench quite bluntly that I believed that one of the deterrents to any increase in the production of Great Britain"—

Mr. G. Thomas: On a point of order, Dr. King. The hon. Member is proposing to read verbatim from the speech of a noble Lord in another place during this present Session. Is it in order for him so to quote?

The Temporary Chairman (Dr. King): It is not in order for the hon. Member to quote, except from a Ministerial statement, in the other place, but he may give the sense of what the noble Lord said.

Mr. Thomas: The hon. Member ought to apologise.

Mr. Skeet: I apologise for reading the actual words used in a speech in another place. I certainly do not mind giving the sense of the words that I wanted to

quote, and it is this. It is that the young executives in industry do not have any strong incentive. I say to the hon. Member and his hon. Friends on the other side of the House that if they would only follow the principles which have been outlined by the hon. Member for Bosworth and by Lord Lucas, they would possibly understand why it is essential to give some encouragement on the export side of our affairs.
I am not making my case on that basis alone. One could approach it in this way. In the first instance, this country is not the most highly taxed country amongst the leading nations. If we take the total tax paid in Germany, France, Norway and Sweden, the United Kingdom comes at the end of that list with a figure of 29·7 per cent. That includes direct and indirect taxes, taxes on capital and contributions to social security. In Western Germany, in 1958, the percentage was 34·7.
There is another way of looking at this matter. The executives in the United Kingdom should be in the same position as executives in other countries. For example, in the United Kingdom on the lower earnings less tax is payable, while more tax is payable in the Federal Republic of Germany. But when we consider the higher brackets, more is paid in the United Kingdom and less in Western Germany. If we take earnings of £1,000, the percentage of gross income taken in tax at that level is 6 per cent. in the United Kingdom, 11 per cent. in France, 10 per cent. in the Federal Republic and 9 per cent. in Sweden.
If we go to £3,000, the corresponding figures are: United Kingdom 24 per cent., France 23 per cent., Western Germany 21 per cent., Sweden 27 per cent., and the United States of America 15 per cent. The higher one goes up the table the heavier is the levy.
I therefore say that it is time that we looked at this question of Surtax. The Chancellor of the Exchequer has considered it in its broader context. Listening to his speech today, what appeared to be uppermost in his mind was how we in the United Kingdom could achieve more exports. This can be done very simply. It can be done by economy in selectivity of investment, not by a system of controls. We have been told that investment has been


rising. We have learned that over the course of the years immigrant money into the United Kingdom from the United States has been valuable to this country. If we consider manufactured goods exported from Britain, American firms or subsidiaries here account for about 11·8 per cent. of the total. Further, if we take the export of goods from the United Kingdom to the U.S.A., the American subsidiaries account for just over 24 per cent. of the total. One of the things that we have done in the course of the years has been to give encouragement to immigrant capital.
The other thing to bear in mind is the heavy rate of investment of overseas resident capital. The American companies have tended to invest more and more in the United Kingdom. In fact, they have ploughed it back rather than remit it home.
Another course of action could be to reduce selected tariffs, allow European goods to come into the United Kingdom and thus encourage us to become more competitive. It seems to me that we have been trying more and more to satisfy the requirements of the home market. In fact, our trade has been oriented towards the home market. The traditional practice in past years has been somewhat broken.
It is worth bearing these figures in mind. If we go back to 1913 visible exports were 22 per cent. of the gross national product. In 1938 they had dropped to 10 per cent. In 1950 up to the present day they have risen to only 17 per cent. of the gross national product. If we add in invisible exports there is not much improvement, because the figures have dropped from 37 per cent. to 15 per cent. and are now only 25 per cent. This country is thus doubly worse off. It has not got the necessary potential in the export field. It is also earning very much less from invisible exports which it had prior to the war.
Bearing all these matters in mind one should consider what action the Chancellor had to take. He had to look for a little more taxation. He had to ensure relative stability. He had to bear in mind, too, that our share of trade in world manufactures has been going down over the course of years. He had to bear in mind that our share of trade in the sterling area had dropped. Have

we got what is essential in both investment, and also incentives to put this country back on its feet? Are we showing that dynamism that we had at the beginning of the century and earlier? The Chancellor has gone as near to it as he possibly can.
We should remember what was done in February of this year through the President of the Board of Trade when certain bills of exchange were allowed to be discounted through the Bank of England, allowing fresh money to be utilised in export credits. Also, there are the recent proposals which have enabled the small exporter and the medium-term exporter, to have certain advantages. The advantage that I am particularly interested in is that of long-term borrowings through the E.C.G.D. to facilitate freer trade in capital goods and, if necessary, to operate with the advantages of loans through Section 3 of the Export Guarantees Act, 1949. These steps have been taken. I dare say that a lot of persuasion had to be used to get the Treasury to accept these proposals.
But I come to one point which has caused me some anxiety. As soon as Mr. Robens of the National Coal Board starts a drive to popularise coal, we find the Chancellor of the Exchequer placing an imposition on the motor car industry and on the oil industry. It comes in this form—2d. a gallon on fuel and heavy oils. It was I think in 1909 that the tax on hydrocarbon oils was introduced, and it was probably as a result of some ingenuity that it was abolished in 1921. My right hon. Friend the Member for Woodford (Sir W. Churchill) initiated the tax again in 1928 and it has been with us ever since. The yield from this source from about 1939 to 1949 was approximately the same, about £57 million, and, if one takes all the receipts which come from oil, from licences and from Purchase Tax, they should well exceed £600 million.
What is the purpose of these impositions? Is it to give assistance to the coal mining industry in its fight against oil? Is it purely and simply for collecting additional revenue? The way it will develop, I think, is this. Heavy oils in the form of Derv have a 2s. 6d. tax if used for road transport, but the rest, until 1947, were spared. That tax


has come back again. We have a precedent to which we may look. In Western Germany, the Bundestag decided to have a tax on heavy and light oils. The effect was rapidly absorbed and it did not greatly help the coal industry of Western Germany.
What will be the position in the United Kingdom? It is the only tax raised this year, with the exception of Profits Tax and a small imposition on advertisers on commercial television.

Mr. Fernyhough: And the poll tax on the sick.

Mr. Skeet: That is not on the sick. I am talking about the Budget.

Mr. Ledger: It should have been in the Budget.

Mr. Skeet: Hon. Members are talking about the contributions which were discussed on another occasion. I thought they had in mind the payroll tax, and that is not on the sick.
The principal target for taxation is the man buying a car. The £12 10s. per year has shot up to £15. I wonder whether the Chancellor read the observations of Professor Kahn in the Financial Times two days ago in which he recommended that very tax. Obviously, my right hon. and learned Friend has to read everything in the course of time, and perhaps he thought that this was a very good way of collecting revenue. But where will the tax on oil and motor vehicles end? If it is to be used as a milch cow over the years, we shall find it rising progressively.
I welcome the Chancellor's decision to take power through Statutory Instrument to alter taxes during the course of the year. Both Purchase Tax and the duty on hydrocarbon oils fall inside that bracket, and I dare say that they can be moved up and down within the 10 per cent. range during the year. Will the tax on oils be raised further? I say no more about it now, but I am a little disturbed.
I understand the predicament of any Chancellor of the Exchequer. He has to raise money for essential purposes, and no Budget will be popular in all parts of the Committee. People will construe what he does in different ways. The Budget as a whole is a balanced

one. My right hon. and learned Friend has in mind the central theme, which showed clearly from time to time: either exports must continue at a higher rate or we shall fall further into the mire. We have witnessed the revaluation of the Deutschmark, but I do not think that we in the United Kingdom will be inclined to revalue our currency. What we wish to avoid is a devaluation of the currency such as occurred during the Administration of right hon. and hon. Members opposite in September, 1949. Devaluation has not occurred under the Conservatives. As time goes on, we are taking the necessary steps to ensure that we have a steady and buoyant economy.
I am happy to know of one or two further concessions which have been made. I have in mind particularly those who were persecuted by the Nazis during the war and who received compensation from Western Germany. If a man opted to receive a lump sum, he paid no tax. If, on the other hand, he agreed to receive an annuity, he was liable to United Kingdom tax. A legalistic argument developed, and I am glad that it is now to be thrust aside.
I should like to see something done about Schedule A, for which, I think there is no justification. Also, I wish that there could be an increase in small income relief. The same applies to allowances for old age; I should like to see a little more done there. I dare say that one has to adopt a patient approach, considering all Budgets in the course of time as part and parcel of the whole, and I hope that it will not be long before some of the matters I have mentioned are considered. Personal allowances have remained as they were for many years at £140 and £240, and I feel that it might be a good thing to move them ahead. I hope that all those matters I have mentioned may be candidates for consideration before very long.

8.35 p.m.

Mr. Frank Allaun: This Budget stands condemned because it increases our fantastic expenditure on arms of £1,600 million a year by a further £48 million. The Government are now spending 6s. of every pound of taxation on war preparations. Eighteen shillings of every pound spent by the Government on research goes on so-called defence work. The best scientific


brains of our country are working in this field. I think that the British people would have rejoiced if the Chancellor of the Exchequer had come to the Dispatch Box today and said, "We will slash this expenditure by £600 million, starting with £100 million this year, a further £200 million the year after, and so on". Even if we cut this expenditure to £1,000 million a year we should still be spending far more than we were spending in the years up to 1950–51, when the figure was £770 million.
What could not we do with this money? Instead of crippling the National Health Service, we could be extending it. Instead of raising pensions to the miserable figure of £2 17s. 6d. a week, we could be increasing them by pounds a week. Instead of the Government cutting council housing, more money could be spent on housing. I feel very strongly about this matter because five out of ten houses in my constituency have no bath, no hot water and no inside toilet. That will be the position for years as things are. Yet we could solve the housing problem if we were not wasting our substance in this way.
Our export and production problems are also tied up with this. I believe that with the £600 million saved on armaments we could start to build
…Jerusalem,
In England's green and pleasant land.
In these circumstances, it is hypocrisy to talk about helping the underdog in Africa and Asia, where there are people who have not had a square meal in their lives and who are far poorer than the poorest in Britain, although there are plenty of poor people in Britain today. "War on Want" is just an empty slogan if we spend £1,600 million a year on arms and increase it each year by £48 million or similar sums. We tend to talk about this knowing in our heart of hearts that we cannot relieve poverty in the under-developed countries if we spend the money on armaments.
Not only is this right but it is also extremely popular. If any party, whether Conservative or Labour, went to the country with a programme of this kind, it would sweep the polls and would deserve to do so. It could quite easily be done. After all, we have ended conscription, much to the pleasure of hon. Members on this side. This means that

220,000 fewer lads will go into the Forces. Surely some economies should result from that.
It could easily be done from savings on nuclear weapons, where approximately £250 million a year is spent. We on the Labour side have our differences of view, but we are agreed that Britain should end its independent nuclear deterrent—all of us, from the Front Bench to the back benches. That would save £250 million a year, and it would solve the problems that the Chancellor has to face.
The next point that I want to raise concerns Surtax. I believe that the Chancellor has committed an act of public indecency by reducing taxation on the very rich by £58 million a year at the very time when it has been increased on the poor by £65 million a year. This shows a lack of sense of public decency. An hon. Member earlier referred to social justice. Do not let us make any mistake about this. This will benefit not only those in the £2,000 to £5,000 a year class. It will benefit those in the top ranges of Surtax.

Mr. Dan Jones: Those with £10,000 a year.

Mr. Allaun: Yes, they will benefit far more than those earning between £2,000 and £5,000 a year.
If hon. Members opposite are concerned about social justice, what about the engineering labourer? It may shock some hon. Members to know that the basic rate of the engineering labourer is £8 4s. 2d. a week and for the skilled engineer, £9 15s. 2d. It might be said that they can earn more by working overtime and getting bonus, but they have to put in the overtime and the hard work to get those extras.
There are thousands of good, honest workers who work as hard in their way as the man who was talked about earlier who gets orders for the country. Many are in a position where they can earn no overtime or bonus. When they have paid their health, unemployment and pensions insurance, they take home £7 14s. a week net. When a man in hat position learns from tomorrow morning's papers that the Surtax payer is to be relieved of taxation in the way proposed by the Chancellor, what will he think? He will think that this is a


Government which stands for the rich and against the poor. He will be dead right. I believe that the right hon. Member for Woodford (Sir W. Churchill) once said this fifty years ago. Today, we have had an example of how right he was. The man earning £8 4s. 2d. a week will pay more for his Health Service, for his council house and for his pension, and those earning £5,000 a year will pay less. This is a case of Robin Hood in reverse.
The payroll tax is an incentive to dismissals, an encouragement to cause unemployment. Do not let us forget that there are 300,000 men and women out of work at a time when we are supposed to be in full employment. Our efforts should be directed to finding them work and not finding unemployment for people who are in work. Things look very different when you are at the receiving end. Probably the Chancellor has never been in that position.
I believe that the Chancellor has today made a bid for the leadership of the Conservative Party. In a number of newspapers lately, there has been discussion about who will succeed the Prime Minister. Most people, I suppose, have their share of ambition and the Chancellor is no different from any other man. He certainly hopes to please the backwoodsmen of his own party and to receive their backing in his bid for the premiership.

Sir E. Boyle: I will give the hon. Member this point: that my right hon. and learned Friend will be more loyally supported by the whole of the Conservative Party than the Leader of the Opposition is supported by the hon. Member.

Mr. Allaun: The Financial Secretary says that his right hon. and learned Friend on this issue will be unanimously supported by the Members on his side, and I am sure that he will be.

Mr. Fernyhough: Is it not true to say that 90 per cent. of hon. Members opposite will get an immense financial benefit from these tax proposals?

Mr. Allaun: I think that my hon. Friend is probably right and that the Financial Secretary will admit that what the Chancellor has done this afternoon will be received with delight by hon. Members opposite and by the whole of

the class which they represent. What he has done will be extremely popular among the Conservative Party hierarchy. There are many sincere hon. Members opposite—

Mr. G. Thomas: There are only eight hon. Members on the benches opposite.

Mr. Allaun: They confuse what is good for their own class with what is good for the country, and I can assure them that they are gravely mistaken. This will go down in history as a class Budget.

8.46 p.m.

Mr. Edward du Cann: I should like, first, to comment on a point made by the hon. Member for Salford, East (Mr. Frank Allaun) on the subject of defence. I agree that the burden of defence is extraordinarily heavy. I agree with him when he said, by inference, that we should do all we can to see that we are spending money wisely. But I, for one, do not grudge money spent on defence if it is wisely spent, any more than I grudge paying that part of my rates which goes to pay the police force which sees that I sleep securely in my bed at night. Indeed, I would go as far as to say that I do not care how heavy the bill for defence is in Britain provided that Britain stays free. That is all that matters to me and, I believe, to the country.
I turn to the Budget and refer, in particular, to the speech of the Chancellor of the Exchequer. I think that in its content, quality and delivery it was outstanding, even as a Budget speech, and I was very struck and pleased by the note of confidence which my right hon. and learned Friend appeared to me to strike. This is a point of particular significance at this time, for in England we have suddenly become very Kennedy-conscious. We realise that in the United States a young man is at the head of affairs. I do not say necessarily that young men are the best at the head of affairs, but there is no doubt that Mr. Kennedy has infused the United States with a new sense and spirit of urgency, and there is no mistaking the fact that our economy has suffered from a certain sense of stale-ness lately and that we have urgently needed a new dynamic. It is probably


much too early as yet to say whether we shall get that new dynamic from this Budget. Personally, I regard it not as an entity in itself but as one of a series of Budgets, and I look forward to the further development of my right hon. and learned Friend's plans.
I fed that the Committee has every reason to congratulate the Chancellor both upon his courage, whether hon. Members agree with him or not, and upon his imagination, again whether or not they agree with the measures which he has introduced. That is a very good sign.
I should like to discuss shortly the size of the surplus for which he is budgeting, the almost horrifying large size of the surplus. We are to have a surplus above the line of £506 million, over £200 million more than his predecessor, Lord Amory, budgeted for last year, and a total deficit of only £69 million, by comparison with the £318 million for which Lord Amory budgeted last year or the £394 million which was the out-turn.
I dare say that when we read our newspapers tomorrow, and particularly the economic pundits, we shall find that many of them say that the Chancellor has been over-cautious and has been pessimistic about the advance of 3½ per cent. in consumer demand and of 3 per cent. in the public sector to which he referred. They will say that he has taken very drastic action, so to speak, to contain the effects which this large volume of increased expenditure would be likely to have upon the internal purchasing power of the £ sterling. I remember precisely the same criticism being made of Lord Amory last year, when he budgeted for a smaller surplus than this.
My views I can sum up very shortly. I would say again that I am prepared to trust the Chancellor's judgment. He may be right, he may be wrong, he may be over-cautious. I would not fault him for that. Where I should fault him would be if he took risks with our economy, or budgeted for a smaller surplus than in his heart he thought appropriate.
I said when I began that I think it is probably right to construe this Budget as one of a series, and I would sooner that we budgeted for a larger surplus today in order to be safe, with the possibility, maybe, of future tax reliefs, than

that he should be profligate and incautious with the economy at this stage in our affairs.
As to the individual proposals which my right hon. and learned Friend has for raising taxes, I say that I dislike them with impartiality. I loathe all taxes, and I hope that is the general opinion of the Committee. None the less, if revenue has to be raised, it is a matter of judgment whether to put it on petrol or on motor vehicle licences, on the Profits Tax, and so on. I do not think that in that respect my right hon. and learned Friend has done a bad job. I do not think that his choices are bad.
The reduction in Surtax rates was a very much overdue reform. With great respect to those hon. Members on the other side who made the point, it is very easy to say that this is a class matter, and so on. That is an oversimplification, as everybody knows. The level of direct taxation and Surtax has been far too high for far too long. I do not fault my right hon. and learned Friend for having reduced this; I fault earlier Chancellors for having funked it. The need has been obvious for long enough. There has been a moral obligation upon a Conservative Chancellor to allow the people who earn their living honourably to keep more of what they earn, and I am glad that my right hon. and learned Friend has honoured that obligation.
What is rather curious is that it has probably not yet been generally noticed—at any rate, it is not a point that I have heard made in the Committee—that, far from there being a shift from direct taxation to indirect taxation, precisely the reverse is the case. I am not in agreement with my right hon. and learned Friend upon that point, as I think that it is appropriate to endeavour to reduce direct taxation, and, if it is necessary to raise revenue, to raise it from indirect taxation.

Mr. Fernyhough: Whenever the Chancellor does that, he puts it on the poor in order to give it to the rich.

Mr. du Cann: That may be the sort of obvious reply which one may make, but I do not believe it to be altogether fair or altogether accurate. What matters, as I think my hon. Friend the Member


for Somerset, North (Mr. Leather) endeavoured to explain, is that we are increasing the prosperity of the country as a whole, and to do that we want to liberate incentives.
It is a matter of judgment how we do it and where we do it. I personally have been familiar—and I think that hon. Members of the Committee in general may agree that this is not an inaccurate picture to paint—with the attitude of those who, when they have been offered promotion, have refused it, whether it was in the country's or the company's interests, because they said that the little bit of extra money they got was not worth it when so much went in taxation. That is a thoroughly bad state of affairs, and if we can encourage people to look for promotion, become managers and make the most of themselves, that is in the country's interests, and that is why I support the Surtax proposal.

Mr. Stan Awbery: What we are worried about on this side of the Committee are the people on whom a greater burden is being placed in order to relieve others. An hon. Member from the other side, speaking in my constituency three weeks ago, stated that it would be impossible to alter the incidence of Surtax unless we put up the charges on prescriptions. If that is so—and from the speeches that we have heard today I think it is quite correct—the poorest people, the people who are actually sick, are having to pay increased charges for prescriptions, and the money is being used to relieve the Surtax payer.

Mr. du Cann: I understand the hon. Member's point very well. I have as high an opinion of him as I hope he has of me, and, therefore, I hope that he will not hold me responsible for what my hon. Friends may say in his constituency. Suffice it to say that I would not agree with that in the least, because I do not think that that statement is an accurate or a very sensible one.
To move on to the question of Surtax, there has been talk today, and no doubt there will be talk at other times, about what are called company expenses of one sort and another. I am the first to agree that in this matter there are scandals. I also think that sometimes the position is very much exaggerated. I was particularly pleased to hear my right

hon. and learned Friend say that there are certain things which he is going to do in regard to home allowances and the rest in attempting to save members of the British public who are abroad on business, endeavouring to do their duty, from being charged unnecessarily by the Inland Revenue.
The whole point is that these scandals, such as they are—the fact that men prefer to run their motor cars on the firm, or dine out and sign the bill rather than pay for it out of their pockets—are very largely due to the high rate of direct taxation on incomes from which we have suffered far too much in recent years. My right hon. and learned Friend was right this afternoon to attempt to say by inference, "All right. I am reducing direct taxation. Now, you chaps, pay for some of these things out of your own pockets if you want to have them." That is an argument with which I sympathise and agree.
There has also been talk on the subject of a capital gains tax, or capital gains levy, as I think it is very much better called. I speak now absolutely for myself. I am in sympathy with the argument which says that persons who make very large sums of money apparently rather quickly are in some way morally offensive to the rest of the community. That is probably true, and there is, I think, some distress in the community at large that this is a situation which is tolerated today.
On the other hand, it is a situation which I believe is exaggerated. I would feel that it is a matter that has to be tackled sooner or later, and I think, on the whole, probably the sooner the better. I certainly do not agree with anybody who puts forward the opinion that here are persons who toil not, neither do they spin, that they make all this money by giving nothing or very little. Very often they make it out of ensuring that proper economic use is made of otherwise idle resources, and that is something that is to be encouraged rather than discouraged.
The longer I am in the House—after having been here only six years I am still a comparatively new Member—the more convinced I am that there is neither black nor white in the world. It is all one shade or another of grey; it may be whiter or blacker, but, generally, most


things are grey. I am sure that everybody who pays attention to the affairs of this House realises that extreme points of view are rarely the most desirable ones. I should have supposed that, in spite of the difficulties, it would have been possible to make some arrangement in that respect, and if it should come I would certainly support it.
With regard to the new instruments which the Chancellor has chosen, I think he is completely right to reinforce his position here. There is no doubt that the credit squeeze and the raising of Bank Rate have been blunt instruments and not altogether satisfactory. The sales tax—for such it is, in effect—I agree with, and I think it is sensible measure to have introduced. I am not so clear or sure about the payroll tax. If it is to be regarded as a threat, I can see the strength and the force of it, but it seems to me that it can bear very hardly upon firms where craftsmanship is put at a premium, or upon firms with small numbers of employees which are not the kind of firms which I assume my right hon. and learned Friend is attempting to affect. Consequently, I hope that a minimum will be set and that the payroll tax will not be all-embracing. For example, I would hope that a minimum number of employees would be set—say, 100—so that the tax should not bear on smaller firms.

Mr. Ellis Smith: The hon. Gentleman is making a reasoned speech. I, also, am against the tax, but does he agree that once one begins to differentiate one does not know where one will get to?

Mr. du Cann: I said that I was not sure about it. No doubt we shall hear more of the matter. I agree that it is a real difficulty, and it is something which all of us need to watch with very great care to ensure that, if it is effective, then it will be effective in the right place. I am concerned at the moment that it might not be effective. No doubt the Chancellor of the Exchequer will be able to explain it in due course.
At the beginning of his speech, my right hon. and learned Friend talked a great deal about Government expenditure as a percentage of the national income. I wish that he had developed that theme further, because I believe that Government expenditure should be a fixed percentage of the national income. Until a Chancellor of

the Exchequer lays down a definite and irrevocable percentage, I do not believe we shall ever see the reduction in Government expenditure which we must have.
It is all very well for successive Chancellors to berate the consumer or the public sector for spending more money and increasing consumer demand, or taking measures to slap down the consumer one way or another, but charity begins at home and it is up to the Government, whoever the Chancellor of the day may be, to ensure that the total of Government expenditure does not exceed a certain, and clearly defined in advance, proportion of the national income.
I was heartened to hear my right hon. and learned Friend say that he is to introduce new accounting procedures. Although I now serve, with many other hon. Members, on the Select Committee on Estimates, I am bound to say that the way in which accounts are presented to the House always confuses me. What has disturbed me most since I became especially interested in this subject is the open-end situation which seems constantly to exist, when the Government do not know what total expenditure can be in any year—whether it is because of wage increases or token votes of £100 which may denote future expenditure of £250,000 or more. That is an unsatisfactory state of affairs. If I ran my business like that, I should quickly be bankrupt. Better forms of accounting are urgently needed.
I criticise the Budget strongly in one particular matter. I shall here declare an interest, although it must already be well known to hon. Members. There is no incentive whatsoever in the Budget to savers. It is an astonishing omission, for the catalogue of what could be done is very long. I am tired of listening to Budget speeches which pay the most extravagant tributes to the National Savings Movement, in which I sincerely join, and at the same time do nothing to encourage any other form of savings. If it is right to exempt from Income Tax the first £15 of interest on deposits in the Post Office Savings Bank and the Trustee Savings Banks, why should not deposits in the Co-operative Bank, or in building societies, be treated in the same way? Why not have thrift banks like American companies?
There are other things that we could do for saving. I have specified them on


several occasions, and I shall not do so again today, but saving and the habit of saving are vital. I note from a recent Gallup poll that about 30 per cent. of our people have no savings whatsoever. That is disgraceful, both in the national interest and in the personal interest of our people. It is up to the Government to do more, when opportunity offers, to encourage a greater degree and volume of saving.
I thought that my right hon. and learned Friend to some extent glossed over the balance of payments position. Last year was our worst trading year for a decade. In 1959, we had a surplus on the balance of payments account of £51 million. In 1960, we had a deficit of £344 million. In other words, the change was about £395 million. I acknowledge that stocks rose greatly during last year and that exports went up by about 6 per cent., £202 million—not a bad achievement—but imports went up by £499 million. In other words, the shortfall on our merchandising account was about £366 million, which is not very far from our balance of payments deficit last year—about £22 million more. In other words, our balance of payments deficit last year was very largely caused by increased imports.
There may be nothing wrong with that if the increase consists largely of a build up of stocks. Indeed, that may be to our eventual advantage. On the other hand, I was a little disappointed that my right hon. and learned Friend castigated exporters for not doing more. He retailed with pride—as he had every reason to do—the way in which the Government in general and the Board of Trade in particular had provided increased credit facilities for exporters.
That is very good, but when the Chancellor said that this had been a bad year for world trade in general—that world trade had not particularly increased—it was not reasonable to castigate exporters for not doing better. Indeed, I go further and say that it is not reasonable to expect exports to rise by more 'than 7 per cent. in any year. I do not think that it can be done, but it would be right for something to be done which has not yet been done—to castigate importers for importing so much.
I cannot understand why, supposing there are goods of comparable quality at

the right price and the appropriate delivery dates in British shops, importers should import from abroad merchandise which is competing with home-produced stuff and thus adversely affecting our balance of payments. Nor do I understand why the man and woman in the street should buy it in the shops. I do not advocate a blind policy of "Buy British"—far from it—but if British goods of comparable quality, and so on, are available, our people at home have a patriotic responsibility to look after British producers before they buy foreign produce.
I have been very much impressed by what Lord Amory has been saying in another place and elsewhere. He has been calling for incentives for exporters. When he, with his recent and great knowledge of the position, can make a plea of that sort, I cannot see that it is not possible to provide financial incentives for exporters. Mere exhortation is not enough and never will be.
A short time ago, I attended an investment conference at which I had to lecture on a subject which hon. Members will be able to imagine. I was struck by the way in which leading figures in the City—I do not fault them in this, for they were talking facts—were saying that in the choice of investment it was wiser not to choose an investment in a company which was a large exporter and that it was better to invest in companies in the home market because they were not exposed to the same winds of competition and would probably do better over the years. That seemed to me to illustrate precisely the difficulty which we are facing. Unless we can get some direct financial incentive to companies doing a good job with exports we shall not get the export drive which the United Kingdom so urgently needs.
The trouble is that unless this position rights itself we shall be faced with the reimposition of import controls. That is a very serious matter and such a re-imposition would be a retrograde step. It is easy, with hindsight, now to say that the Government should not have reduced imports controls so precipitately in the first place, but at any rate they were stepping in the right direction, for Britain's chief interests depend on an increasing volume of world trade and upon people besides ourselves reducing import controls.
We have to set an example. I would be very sorry to see import controls come back, but I am afraid that there may be no alternative unless we seriously tackle this question of incentive for exporters and find some method of dealing with this. I am aware of all the difficulties—there is the Berne Agreement, from which we derive advantage—but, nevertheless, it is something which can and must be done. After all, other countries have done it successfully.
Lastly, I should like to say a word about the Budget in general, and perhaps its social purpose. The right hon. Gentleman the Leader of the Opposition concluded his speech by saying that the Budget ought to have two objectives. First, it should benefit the economy as a whole. I agree, and the question whether this Budget will benefit our economy is a matter of judgment, and time alone will tell.
I am satisfied with it so far as it goes. As I said, I look to it as being one of a series of Budgets, and I do not doubt that if the Chancellor brings to the Treasury the kind of imaginative mind which he appeared to demonstrate when he began his speech this afternoon Britain will not go far wrong.
The right hon. Gentleman said that the second purpose of a Budget was to secure the equitable distribution of wealth. I believe that to be only partly true. I am thoroughly sympathetic towards any hon. Member who says, "Let us see that the people who cannot look after their own affairs to the best advantage because they are not young enough or strong enough to do so are properly looked after as a responsibility of the community". I fully agree with that. On the other hand, I do not believe in an egalitarian society—nor do the Russians, but that is another subject. I believe that we shall prosper only if we genuinely attempt to say to our people "Stand on your own feet. Make as much money as you can, and by the sweat of your brow earn promotion. By so doing you will bring credit to your families and to your country". I think that the Budget takes a step in that direction, and because of that I welcome it.

The Temporary Chairman: I am trying to call as many hon. Members as I can, and it would help if hon. Members

would co-operate by making their speeches as short as possible.

9.13 p.m.

Mr. George Thomas: I have been present in the Chamber throughout the day, with the exception of the time when the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) was speaking, and I have, therefore, been able to hear almost every hon. Member who has spoken from the benches opposite criticise the Budget on some point or Other.
The hon. Member for Taunton (Mr. du Cann) made a most interesting speech. If I may say so without patronage, he is a financier of considerable standing, or so I understand from reading the advertisements. He deals in the City, in that mysterious world where stocks and shares are understood. I thought that he damned the Budget with faint praise. He gave the Chancellor of the Exchequer a rough ride on some important questions.
I was glad that the hon. Gentleman referred to my right hon. Friend the Leader of my party, because I warmly agree with what my right hon. Friend said about the general purpose of a Budget. It is, after all, the chief weapon of the Government in deciding the question of economic stability during the coming year, and also of ensuring that a fair share of the national wealth is received by all our people. We must examine the Budget from that point of view.
I believe that the proposal to benefit the wealthy people of the community will be strongly resisted and criticised outside the House of Commons. It is indefensible to bring a proposal of that sort before the Committee within weeks of pleading the necessity of charging 2s. for a bottle of medicine. It is preposterous that the Chancellor of the Exchequer should tell the Committee that we can afford to give to people earning more than £2,000 a year the considerable relief which he is offering today, when we cannot afford to give to people on National Assistance rates even the miserable increase which the old-age pensioners have enjoyed.

Mr. Fernyhough: And in a week when we shall be discussing a further charge on the orange juice and cod liver oil which babies receive.

Mr. Thomas: I am very grateful to my hon. Friend.
It is quite clear that the priorities of hon. Members opposite are vastly different from the priorities which we hold on this side of the Committee. This will be regarded as a rich man's Budget. The health of the Chancellor will be drunk in every rich man's house tonight, although not, I hope, in the same spirits that he drank before us this afternoon.
I believe that the Budget is inequitable and will fail to provide the incentives for which so many hon. Members opposite have pleaded to increase our export trade. I shall say a word about that later.
I wish that the hon. Member for Somerset, North (Mr. Leather), the hon. Member for Ilford, South (Mr. Cooper) and the hon. Member for Croydon, North East (Vice-Admiral Hughes Hallett), all of whom made speeches very critical of the workers, were in the Chamber to hear me say that I am "fed up" with hon. Members opposite admonishing the workers about restrictive practices when they know the practices which go on elsewhere, to which the Chancellor himself referred this afternoon, and about which he proposes to do nothing at all.
I am sorry that there are certain omissions from the Budget. There has been no reference to post-war credits. I believe that the time is overdue for the Chancellor to look again at the question of the repayment of this national debt to our old people. I am sorry that no reference was made to those people who have lost so much money on war loans and whose patriotism has been exploited. No comfort is given to them, and no undertaking has been given to help them in any way. I notice that the man who buys a Bentley will have to pay £3 more tax a year, the same amount as the man who buys a Morris Minor. I believe that there will be a storm of reaction about this within the next few days.
This afternoon the Chancellor referred to the fact that he is budgeting on the basis of a 3 per cent. increase in local authority expenditure. I believe that estimate to be hopelessly inadequate in particular in respect of education. We are lagging behind almost every European country in the proportion of the national

income which we devote to education. The Chancellor said that he hoped that we should not be short of technologists and technicians, but unless the money is available we are bound to find the education service breaking down.
At present, a salary demand is being put forward by members of the teaching profession, very few of whom, if any at all, will benefit from the Surtax relief offered in the Budget. If they are on the basic scale teachers who have taught for forty years and are on their maximum salary will not even now be receiving £1,000 a year. It is clear that a substantial increase in teachers' salary is bound to come during the current year and that this will impose a burden on local authorities. I wish that the Chancellor had told the Committee that he is looking again at the whole question of financing local authorities.
The rating system is unjust and socially indefensible. I believe that the right hon. and learned Gentleman ought to say that he will readjust the general financial formula on which Exchequer aid is given to local authorities. That is the only way, in my opinion, that people in local government service will get a fair deal. It will be increasingly difficult for teachers, and people like them in the public service, to negotiate with local authorities for a reasonable salary—in order at least to maintain their social balance with other workers in the community—if the main burden of the cost is all the time to fall on the ratepayers.
I cannot say how much I believe that the general grant system of financing local authorities is proving a handicap. Already, it has manifested itself as a serious difficulty for local councillors. It will impede the expansion of the education service. Hon. Members will realise that all the Chancellor of the Exchequer had to say about our expanding economy will turn to dust and ashes if the education service fails. We cannot afford to cramp it in the manner in which it is cramped by the present financial system.
I warn the Economic Secretary—I hope that he will convey the warning to his right hon. and learned Friend—that those whose one concern is the expansion of our education service, and the provision of facilities for further


education, are agreed that the red light is showing because of the general grant system.
I earnestly hope that the Chancellor will watch the way in which this is proving to be a Government restrictive practice which ought to be abandoned. I want to see a return to the percentage formula. It is unreasonable to expect all local authorities, whether they are rich or poor, to make the same contribution to the financing of our education service. In any case, it is unreasonable to base a person's contribution to the expenditure of a local authority upon the type of house in which he lives.
The taxation system may be disliked by us all. I suppose that every normal person shares the feeling of the hon. Member for Taunton, who does not like any taxes that he has to pay, but the others are much more attractive. At least, it is rough justice. A person pays according to his income and means. The rating system is entirely indefensible. The poorest people have the same demands as the richest people in the community. Our Welfare State has already been badly damaged, but if it is not to be damaged much more the time has now come when it is necessary for the Treasury to look again into the whole question of local government finance.
I want now to refer to the people who are called public service pensioners. The hon. and gallant Member for Croydon, North-East spent a long time in dealing with these people. I think of retired Post Office workers, retired teachers, retired railway workers and all sorts of people who were in the public service and contributed to a pension, as in the case of teachers, which would have provided them with a reasonable income and maintained their general standards at 50 per cent. of their salary. People who retired in 1947 and before then are living in poverty. People who contributed 5 per cent. of their salary for years, and who were entitled to expect the State to honour this agreement and maintain their pension at a proper value, are being betrayed by the way in which Government after Government refuse to link pensions to the cost of living.
I hope that the Treasury will realise that this is a matter for urgent consideration. The old guard have a moral claim on us to protect them in an in- 
Flationary society like this, because ever since the party opposite took office ten years ago, the £ has been shrinking in value. Never before in peace time was the £ worth as little in purchasing power as it is worth today. The people who suffer most are those on low fixed incomes. I hope that the Chancellor of the Exchequer will remember these people.
I believe that the Budget ought to be used to strengthen our Welfare State and ensure that the strong help the weak and the rich help the poor. We have had a Budget today in which the poor help the rich and the weak buttress the strong. There is no incentive for the workers in export industries. The incentives are all kept for the people who, in any case, will not work any harder because of what the Chancellor of the Exchequer has done today. They will have more to spend without working any harder. It is unreasonable and unjust. I hope that when the time comes my right hon. and hon. Friends will vote at full strength against the Budget.

9.29 p.m.

Mr. William Clark: I listened to the speech of the hon. Member for Cardiff, West (Mr. G. Thomas) with interest. I am sorry that he spoiled his interesting speech by his endeavour, in his opening remarks, to give the impression that it was only his side of the Committee which was interested in the welfare of the people. The hon. Gentleman knows as well as anybody else that Conservative Administrations since 1951, and previously, have done more than any other political party in the history of the country for the welfare of the population. I am sorry that he spoiled such an interesting speech.
I was glad that the hon. Member referred to War Loan. We all have a certain amount of sympathy with holders of War Loan, and I am delighted that my right hon. and learned Friend has at last agreed to alter the anachronistic state of the Government accounting system that has, apparently, gone on since the year dot. How one can get a capital item, such as Estate Duty, shown as a Revenue item I do not know. I should like my right hon. and learned Friend to consider in the future investing in this country by reducing our National Debt. One way of doing that would


be by repayment of Wax Loan for Estate Duty purposes subject, of course, to a limitation, so as to avoid speculation in War Loan.
In general, I welcome the Budget. By his treatment of Surtax, I think that the Chancellor has introduced an incentive which, since 1920, has been progressively reduced. However, sufficient has been said already by my hon. Friends on this subject, so I shall not bore the Committee with repetition.
One thing that rather worries me in the White Paper and, in fact, in the Budget—my right hon. and learned Friend himself referred to it—is the high pressure of demand, and the inflationary tendency that is creeping into our economy. We have seen the effects of inflation since the end of the war and, of course, those hon. and right hon. Members who are a little older than I have had even more practical experience of it. The danger of inflation, the high pressure of demand at home, and the danger it is to our balance of payments position requires that we should do something about this demand before it gets out of hand.
The party opposite tried, by very high regressive taxation aimed at reducing the amount of money left in the hands of the taxpayers at all levels, to cut down consumer demand. That is one way. Another, which relates to our balance of payments, is to restrict imports. Neither of these ways do I accept as the right method for this or any other Government to adopt, but there is another way in which the Government can give a lead in cutting home consumption. I refer to savings, to which my hon. Friend the Member for Taunton (Mr. du Cann) referred.
One of the most difficult things about savings is not how to get the money to save, but how convenient it is to save it. So often we find that people have very good intentions of saving, but cannot go through the rigmarole of effecting it. I should have thought that the P.A.Y.E. tax collection system, which now might be described as part of the heritage of the British working man, could be used as a savings medium.
As all hon. Members know, each employee has a certain code number, and it should be quite easy for the Revenue to give a man a savings code number so

that he could save 5s., 10s., £1 a week—or whatever it might be. The Government would then have on tap as potential savers a working population of about 24 million, and I am sure that we all have had sufficient experience of people to know that what is taken at source is very much more readily given than what is taken after a man has received his pay. Consequently, I should like my right hon. and learned Friend to consider whether P.A.Y.E. machinery could be used to increase our small savings.
In increasing our small savings we must be very careful to give sufficient incentive to save. Obviously, the 2½ per cent. that is paid on Post Office savings is an extremely low rate of interest, and I should have thought that 4 per cent. would be much better. If this were done through P.A.Y.E. we should have to make sure that a man did not save too much of his income. Otherwise, the wealthy man would be saving more than a man who was not so wealthy.
Any money saved should carry with it a certain exemption for Income Tax purposes. Like my hon. Friend the Member for Taunton, I cannot see the difference between £15 interest in the Post Office Savings Bank or the Trustee Savings Bank and £15 investment income from any other investment. What is good for one is good for the other. There should be a total exemption of £15 a year on all investment income, to encourage saving in all forms.
A matter that I regret—and I raised this point last year—is the absence of any reference to a reduction in Schedule A tax on owner-occupation. In the last Budget speech my right hon. and learned Friend's predecessor said, by inference—these are not his exact words—that when there was a reduction in taxation Schedule A would have its priority. I have a vested interest in this matter inasmuch as in company with other hon. Friends of mine at the General Election, and subsequently, I am committed to saying that Schedule A is an iniquitous tax. I very much regret that this year my right hon. and learned Friend has not made a start on the abolition of this tax.
Obviously, to abolish Schedule A tax altogether would coat from £45 million to £50 million, and one might say that that is far too inflationary to add to the


consumer demand in this country. But it could be done. A start could be made. I have said that all savers should have the first £15 of investment income exempted, and I therefore suggest that the first £15 of net annual value should be exempted. This might cost £25 million, and my right hon. and learned Friend might say that that is too inflationary.
Another method would be to endeavour to cut the amount of paper work in making maintenance claims for Schedule A purposes. I would remind the Committee that I am speaking only of owner-occupation. If the statutory repairs allowance were doubled, that would cost the Exchequer £13 million.
Therefore, my right hon. and learned Friend has these methods. He could double the repairs allowance; and he could allow the first £15 of net annual value to be exempted, to bring it into line with Post Office savings. I cannot understand how anybody can say that a man who has put his savings into bricks and mortar is a less worthy saver than a man who puts his 30s. a week into the Post Office or Trustee Savings Bank. Both are equally good savers. As I say, I am committed on this matter, and I trust that I shall during the Committee stage of the Finance Bill have another opportunity of speaking about it.
I come now to the subject of the inflation. In his Budget, my right hon. and learned Friend is raising the yield of taxation by about £80 million. With the increased allowance for the National Insurance contributions of £12 million, this gives a net increase in taxation of £68 million. If he were to adopt the principle that Schedule A should not necessarily be abolished, but that a start should be made, and if he started with double the statutory repairs allowance, that would account for £13 million, which would bring the net addition to taxation to about £55 million. As we have seen, the out-turn during this next year is an overall deficit of £69 million, and if £13 million were allocated for double the statutory repairs allowance on Schedule A, the out-turn would be £82 million deficit.
Like my hon. Friend the Member for Somerset, North (Mr. Leather), I cannot see how, with total taxation at about

£6,508 million, anyone can say that £13 million, £23 million, or £43 million is, in fact, inflationary.

Mr. Bruce Millan: The hon. Member will realise that some of us are in the same difficulty about this figure of £13 million, because it is approximately the amount which the Government will derive from increased prescription charges.

Mr. Clark: That argument may be all right in some other debate, but surely the hon. Member is not trying to bring prescription charges into a Budget debate.

Mr. Millan: Why not?

Mr. Clark: Prescription charges have nothing whatever to do with the Budget. I thought that I was coming to the end of my discussion of Schedule A taxation. Why the hon. Member should try to kill my idea about Schedule A by bringing in prescription charges, I cannot understand.
Just before I was interrupted, I was saying that I could not understand how any economist could say that an increased deficit of £13 million could be inflationary when set against total taxation. I have worked it out that £13 million out of total taxation of £6,508 million is one-fifth of 1 per cent. We have said time and time again that a start should be made, and I am sure that this is the moment to do it.
We are a highly industrialised country. We had a rise in productivity in 1959. There was a slowing down during 1960.

Mr. Fernyhough: Stagnation.

Mr. Clark: Very well. It was the same throughout 1960, but hon. Members opposite will agree that there was a good rise in productivity during 1959.

Mr. Fernyhough: After three years of stagnation.

Mr. Clark: Hon. Members are very keen to get in these odd digs, but the productivity that this country has enjoyed since the Conservative Party came into office has been responsible for the highest standard of living that the country has ever had. It is a little unfair of them to say that this sort of thing is stagnation.

Mr. Fernyhough: We are not saying that there has not been some increase in


productivity since the Conservative Government came in. What we say is that it is only half what it was under the Labour Government.

Mr. Clark: It is extraordinary that, although hon. Members opposite say that we do only half as well as we should, nevertheless, in every section of the welfare services, we have doubled the rate of expenditure and doubled the benefits we give throughout the entire operation. Hon. Members opposite know that, as I know it.
I wish to revert to the question of productivity. I said that in 1959 there was a huge rise in productivity. In 1960, it was static. Somehow, we must, in the next year, cut down consumer demand at home. We have to cut down the pressure on our economy. Only in that way will we be able to increase our exports and channel our goods into the export market, because it is on exports that the whole standard of living of this country depends. I believe that in certain respects the Budget takes a step in the right direction, and I hope that it will not be very long before the Government take further steps.

9.45 p.m.

Mr. Ron Ledger: I have listened to all the speeches in the debate. There has been a considerable diversity of opinion, particularly on the benches opposite, about how any benefits that there might be in the Budget should have been shared out. I was about to interrupt the hon. Member for Nottingham, South (Mr. W. Clark), and I will say why. He said that there was a considerable increase in productivity in 1959 and that there was virtual stagnation in 1960. I agree with him. If the Government decided that there should be a General Election in October this year, I am sure that we should see another spurt, with the Government doing everything they could to enable industry to expand and production to increase. The only difference between 1959 and 1960 was that in the former year the Government had an election to win and had to prepare the ground for it. There was no reason why they should not have done in 1957 or 1958 the things that they did in 1959, except that they were not at that time prepared to have a General Election.
From experts, which is what hon. Members call themselves, we have heard some fantastic things this evening. I agree that the Chancellor of the Exchequer presented his case very ably. I listened to what he had to say about the need for increased production. He said that exports were not increasing fast enough and that we had to give incentives. I agree with these things, as do my hon. Friends. However, when I read the Budget Resolutions, I wondered why he said the things that he did say. Certainly the measures that he proposes have little to do with expanding exports, providing incentives or curtailing home consumption, as was suggested by the hon. Member for Nottingham South.
The remedies suggested by the Chancellor are concerned, not with the economic situation, but rather with the deep divisions and rifts within the Conservative Party. What he has done is to give in to the "wind and whiskers brigade" behind him. There have been deep divisions on the benches opposite concerning Africa and the need, they say, to reintroduce the birch. The right hon. and learned Gentleman has somehow to console these people for their disappointments and, therefore, he has attempted in this, the second Budget of the past two months—we debated a "budget" a little earlier—to cool them off.
I should like to refer to one or two points made by hon. Members opposite this evening. For instance, the hon. Member for Somerset, North (Mr. Leather) said that the fallacy of the arguments advanced from this side of the Committee was that the statistics used were wrong, because fewer people are now engaged on profitable work. Those are not the exact words that the hon. Gentleman used, but I do not see what that has to do with it.

Mr. Leather: With great respect to the hon. Gentleman, I did not say that at all. I did not say that the statistics were wrong. I said that the conclusions drawn from them were wrong. I did not say that that was because the work was unprofitable. I said that that was because the statistics were based on manufacturing work and the majority of our population is concerned with services, which are a quite different thing.

Mr. Ledger: That is the whole point. What difference does it make how many


are engaged on services or on manufacturing work? The fact is that with the advances of technology, we expect that every person engaged in productive work will do more as the result of new and modern machinery. I listened to the argument of the hon. Member and I noticed that he was careful not to use any statistics to prove the points that he was making.
The hon. Member for Ilford, South (Mr. Cooper) made the point that it was the easiest thing in the world to produce goods but that the difficulty was to export them, and he went on to talk about restrictive practices. We on this side get a little bit sick and tired of hearing this talk of restrictive practices. When I asked the hon. Member for an example, he said that Cammell Laird was a well-known case. It is well known because there are so few cases. That is the only case that the papers can get hold of to publicise.

Mr. Leather: Rubbish.

Mr. Ledger: When I asked the hon. Member for Ilford, South for examples, that was the best he could give. It is a fairly old example and it is doubtful whether it is concerned purely and simply with restrictive practice or whether it is concerned with the breaking of agreements by employers.
The hon. Member for Somerset, North concerned himself with the problems of exporting and he said that he could not think what the real answer would be. He said that many things were being tried but that the question posed a problem for him. I have met a number of people in business who have been abroad in the past few years. One thing that impresses me is the number of people who go abroad on business expenses but who come back and say that they have not been able to arrange any business.
I suggest that much of the problem that faces us is not whether the Chancellor should give more incentive to exporting firms, but whether within industry we have the ability to export. We have the "know-how" for making the goods, but certainly, when we see the way in which we are represented on the benches opposite, I doubt very much whether we have the people of ability to sell these goods abroad.
That brings me to the first point of criticism of the Budget. The Chancellor said that he expected an increase of 3 per cent. in public expenditure. As my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) said, this will mean little extra expenditure by local authorities on matters like education. In my constituency, as a result of Conservative legislation, we are years behind with our education programme. This is particularly bad at a time when we are in need of many more technical colleges. We need many more technicians. The Russians have been able to send a man into space. The only qualification for technical skill that the Government have is that they attempted to produce the Blue Streak. The whole thing was a failure.

Vice-Admiral Hughes Hallett: The hon. Member said that, as a result of Conservative legislation, his constituency was years behind in education. To which Act of Parliament was he referring?

Mr. Ledger: It is not a question of referring to an Act of Parliament, but simply to the fact that successive Chancellors of the Exchequer have effectively reduced the spending by local authorities on education.

Mr. Leather: It has been doubled. The hon. Member cannot count.

Mr. Ledger: It may have been doubled—I have no doubt that it has been—

Mr. Leather: The hon. Member has just said that it has been cut.

Mr. Ledger: If I may be allowed to finish—the amount of money may have been doubled due to inflation, I agree—

Mr. Leather: Oh, no.

Mr. Ledger: —but on at least three occasions, the programme for building schools in my constituency has had to be put back. For instance, the Church of England in my constituency has pressed me to make representations to the Minister of Education to include in this year's programme, 1960–61, a school which it had expected to complete in 1958. It is in these days, when we need more technical colleges, that the Chancellor of the Exchequer says that in the


next year we shall increase public expenditure by only 3 per cent.
The main point which I want to make concerns Surtax, and the Economic Secretary to the Treasury knows what I want to say, because only a month ago, when we were debating the new Health Service charges and contributions, we made the point time and again that those charges should have been part of the Budget. We asked what was the significance of the fact that the Minister was raising £50 million when he needed only £5 million for the extra hospitals which he intended to build. Today we have the answer. The hon. Member for Somerset, North was not here in any part of those debates, nor were most hon. Members opposite, because on that occasion we were debating a poll tax on the poorer people of this country, and there were rarely more than two Conservative Members in the Chamber at any time. Now when the Chancellor is giving away £60 million or £80 million to Surtax payers, they are here to enjoy themselves.
We asked the Chancellor on that occasion whether he was raising these contributions in order that he could give something away to the Surtax payers in the Budget, but we could not get an answer. There is a coincidence in the fact that the amount which is to be given away is about equal to the amount which has been collected from the Health Service contributions.

The Economic Secretary to the Treasury (Mr. Anthony Barber): The hon. Member realises that the cost of the Surtax concessions in a full year will be £83 million but will not be a burden on the Exchequer until 1st January, 1963, and that this in large part will be met by the increase in Profits Tax which amounts to £70 million in a full year.

Mr. Ledger: I appreciate that. In the same way, it was argued that the increase in contributions was for building new hospitals, but the additional expenditure was only £5 million and it would have taken ten years at that rate to use all the extra money collected from the extra contributions in one year. The point which I then made was that it was unnecessary to increase those charges. It would have been much simpler for the Chancellor today to have introduced a

proposal for a capital gains tax which would have made it unnecessary for the Health Service charges to be increased.
I ask the Chancellor to consider increasing the amount of public expenditure so that local authorities can catch up with their school building programmes and so that we can build more technical colleges.

Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. Finlay.]—put and agreed to.

Report of Resolutions to be received Tomorrow.

Committee also report Progress; to sit again Tomorrow.

Orders of the Day — ROADS (M.1 EXTENSION)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Finlay.]

9.59 p.m.

Mr. John Farr: In the course of my studies for this short debate on the motorway it has puzzled me to find that apparently since the M.1 was opened, twelve or fifteen months ago, there has been no debate on the subject. I have searched all the records. There have been numerous Questions on the subject, but no debate. It has struck me many times that the motorway is a new conception in travel. It is a difference which can be compared with the difference between the stage coach and the motor car of sixty years ago.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

Mr. Farr: I was saying that just now is as good a time as any, after the motorway has been opened for a year, to examine some of the effects that it has had on the national economy, possibly, some of the defects in the motorway itself, and, moreover, what a vast benefit it would be if it were carried on northwards from Crick, where it stops at present.
I ought to explain, before going any further, what qualifications I have for initiating a debate on the motorway. My chief reason for being here tonight, and speaking on this subject, is because as soon as it starts to travel northwards from Crick, for over 20 miles it will be in southern Leicestershire and in my own constituency. I know what a vast difference it will make to people who live in or near the route which it will take.
Nationally, in my opinion, the extension of the motorway is vital, but it would also have its personal effect on those people who live in and near the villages which it will by-pass. Some of them will be helped, and some will be hampered, but all of them are convinced that if Britain is to have the road system which is due to her the motorway must be pushed forward as soon as possible.
What are some of the facts and figures which, in the very short time available tonight, may be usefully given about the M.1? It cost, for its 72 miles, £24 million, or £330,000 a mile. How has the nation benefited, apart from the abolition of traffic jams on that road and speedier travel from point A to point B? Today, my hon. Friend the Joint Parliamentary Secretary has been good enough to inform me that about 18,000 vehicles a day use M.1 when the weather is fine. That figure has increased from 15,000, which was the daily average only three or four months ago in January, and it shows that the figure is rapidly increasing all the time.
Another factor which, I think, well deserves attention by the House is the fact that the accident rate on the M.1 is only half that of the best type of other roads in the country. Moreover, heavy goods vehicles can make the round journey in about 50 minutes less than in the old days, and a motor car making the round journey on M.1 can do it in up to two hours less.
The benefit does not end there. It spreads to the adjoining roads, like A.5 and A.45. If we look at the very valuable statistics which we have, we find that in the year since the M.1 was opened, the accident rate on these subsidiary roads fell by no less than 60 per cent. The journey time on these roads—A.5 and A.45—has been reduced by

20 or 25 minutes, and I am told that in terms of economic benefit to the nation the whole of the construction cost of £24 million will be repaid in about eight years.
There are one or two other points of benefit which the M.1 has had for us. One is the point which has been brought to my notice by the manufacturers of heavy engines and vehicles. For the first time in this country, they have a long-distance road on which to test their vehicles in working conditions, not for a day of a few hours, but repeatedly. We all know that if British exports, particularly motor engines and chassis, are to stand up to competition, it is absolutely essential for them to be able to do these daily journeys up and down the autobahnen of Germany, or the main highways of the United States; and for the first time we have a first-class road which can be compared with any in those two countries.
Another saving is in the carriage costs of goods from what is probably the industrial centre of England, Birmingham, to the coastal ports. They can get there quicker and cheaper; moreover, they can be guaranteed to get there on time far more than they could in the old days when the vehicles had to weave their way through the maze on the A.5 or the A.45.
The sun is not altogether shining on the picture which I wish to put before the House. There are certain disadvantages. In the limited time available to me I want specifically to examine one big disadvantage. Thus trunk route goes through the heart of England, and then it is suddenly cut off dead, right there. This may be compared to the blocking up a river in midstream, or the blocking up of a drain; the water seeps out and permeates through the channels and, finally, finds its way to its destination. Exactly the same thing is happening in southern Leicestershire today.
The M.1 stops at Crick. There are 18,000 vehicles using M.1 on a fine day. Half of them get to Crick and then enter southern Leicestershire, and the result is that the whole county is on some days, especially at weekends, absolutely congested. I hate to bring in the foreign tourist here as a gimmick, but what a shock it must be to a foreigner bowling along Britain's fine new motorway in the


space age and then suddenly getting to Crick and then having to enter and grope along the narrow lanes and bypasses of Leicestershire. If one enters Leicester City in the middle of any working day one will find it choked. If one enters Rugby, a little further to the west, on any working day one will find it choked.
In my constituency we have the town of Blaby, of which we are very proud. Blaby—I worked this out on the map tonight—is about 15 miles north of the horrible bottleneck at Crick. In Blaby the other day a 12–hour census was taken of road traffic outside the social centre, and it was found that no fewer than 10,400 vehicles passed that spot in that period. If one compares that with the 18,000 vehicles using the M.1 on a fine day, one appreciates that through the narrow streets of rural Leicestershire passes an impossibly heavy load of traffic daily.
There is also Lutterworth, which is about seven miles north of Crick. I had the pleasure of spending many months in Lutterworth about two years ago in a hotel room over Lutterworth High Street. The rumble all night kept the residents awake. During the daytime I, a fairly agile person, sometimes had to wait nearly five minutes before I was able to cross the narrow High Street, and I think that some hon. Members might have to wait up to half an hour before they could cross it on certain occasions.
That is the position at present. What specific reasons have I for initiating the debate? I will deal with them very briefly. It has been said before in the House, and I repeat it, that M.1 has proved itself an undoubted success. It has been estimated by the Minister of Transport that it saves the nation about £3 million annually. Let us look at it in another way. What does it cost the nation annually not to go forward with the other half, running from Crick to north of Doncaster? That is a little more than 72 miles, which is the distance of the present M.1, and it is costing the nation annually at least £3 million for every year that its start is delayed. It is a thousand pities that the work was stopped at Crick when it was.
Why is there such a delay in restarting the motorway? I have considered all

the usual reasons that are given to hon. Members seeking to find out the answers to awkward questions, and two reasons occur to me most. These are that the delay is because of shortage of money, or because of shortage of materials. If it is the farmer, then I suggest that the Chancellor of the Exchequer should be asked if he will allocate to this work the £25 million which he is to get this year by the increased Excise Duty licences which he announced today. That £25 million would meet the cost of the extension of the M.1 northwards to Doncaster almost exactly.
I am very loath not to use British materials, machinery and workmen wherever we can, but if it is shortage of material that is holding up construction, and we really are stuck for material and the vast complicated mass of heavy machinery that is necessary, then I suggest that the Minister should hire them from abroad on Government account and so get cracking with the job.
As a regular weekly user of the M.1, there are one or two points about it which I should like to bring to the Minister's attention. Why must the two carriageways run together parallel the whole time? I agree that, generally, this is the best thing to do on grounds of economy, but it has many serious disadvantages. I beg of the Minister that, when extending the motorway north from Crick, he makes use of alternative roads, enlarging them and widening them to provide for the north or south-bound lane, and then allowing the other lane to take an alternative course, perhaps diverging by as much as a mile.
My reasons for making this request are threefold. In the first place, it tends to relieve monotony. The second reason is far more important, as any hon. Member who has travelled at night on the M.1 will know. One gets a terrific lot of dazzle from approaching vehicles. Diverging roads, with a field or wood between them, would mean that that would not happen.
The third reason is that it has become noticeable in the—thank goodness—relatively few accidents on the M.1 that very often an unfortunate driver's tyre bursts. He skids across his carriageway straight into the path of traffic from the opposite direction. Many deaths are


caused, especially at high speed, by vehicles crossing the narrow verge between the two carriageways. With diverging carriageways that danger would be removed.
I also ask my right hon. Friend to use his powers to ensure that no licensed premises are allowed on the motorway. While travelling at 45 m.p.h. it is possible to get away with missing a vehicle by a hair's breadth even if one's judgment is slightly impaired by one or two drinks, but one will never get away with it at 90 m.p.h., when the slightest mistake may be fatal.
I congratulate my right hon. Friend the Minister and his Ministry for what they have done about the construction of this fine motorway. The Parliamentary Secretary was good enough to see me last December and then promised me an early start of the motorway in Leicestershire. I asked him now to be more specific and to promise to start the motorway within a year and to start it due north from Leicestershire.

10.16 p.m.

Mr. Albert Roberts: I am very glad that the hon. Member for Harborough (Mr. Farr) has initiated his debate about the London-Yorkshire motorway. I have asked many Questions about the motorway, and I am glad to have the support of the hon. Member. I appreciate that we cannot have a motorway in Yorkshire for at least three and a half years, but the blame for that must be laid on the Minister of Transport. When a motorway is first planned, it must be planned to serve the whole of the United Kingdom and I agree with the hon. Member for Harborough that for the motorway abruptly to end at Crick is not to get full benefit for money expended. I come from Yorkshire, which has 4½ million acres and 4 million people. The soonest that we can expect the motorway is in four years.
I well remember the Minister's predecessor saying that that was because the authorities in Leicestershire could not make up their minds and that what was Yorkshire's loss was Lancashire's gain. It is an insult to the industrialists and other inhabitants of Yorkshire that we should be left like that. It should be brought to the attention of the public that hon. Members are doing their best

to serve the needs of the area east of the Pennines.
The Minister of Transport must realise that if we are to make the best of these motorways and get the greatest economic advantage from them, they must serve industry where industry is situated. It does not need me to say what industry there is in South Yorkshire, with its heavy engineering, steel, its prolific coal fields, but it is a part of the country which is neglected just because the County of Leicester could not make up its mind, although at that time the Minister had power to deal with the problem. If the debate has done anything to expedite the construction of the motorway to the extent now planned, it will have been well worth while.
There is some bias in these matters. I know that it is history that we had to fight for a ship canal in Yorkshire, but when one was wanted in Lancashire it was constructed. We are now fighting for a bridge over the Humber. Yorkshire is one county which, with its industries and agriculture, could maintain itself; and we are paying our share towards the nation's wealth. We have had a raw deal and I hope that the Parliamentary Secretary will give us a little comfort in response to the appeals which I have made to him about the London-Yorkshire motorway.

10.20 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. John Hay): I welcome the opportunity which this brief Adjournment debate gives me to say a little about the progress we are making towards the completion of the London-Yorkshire motorway which lies to the north of Crick.
My hon. Friend the Member for Harborough (Mr. Farr) began by emphasising the importance to this country of the motorways and the very substantial economic benefits which we can obtain. On 25th January last, in answer to a Question by my hon. Friend the Member for Twickenham (Mr. Gresham Cooke), I gave the House a little information about the results of the operation of that part of the M.1 which goes from London to Crick. The House might like to know that the Road Research Laboratory published at the beginning of this year a technical paper, No. 46, which gives a survey of traffic and economics of the motorway thus far. I believe that


a copy is available in the Library. It is a most illuminating document.
We are in no doubt that motorways are an excellent investment for the nation. A motorway saves time, money, and laves. As my hon. Friend said, the accident rate on the motorway so far is about half that on the best of the other roads which we have. We therefore want to press on with the extension of motorways, not just this one, but the others throughout the country, as quickly as we can.
May I come now to the principal point raised, which is the extension of the motorway from Crick to Doncaster, and how quickly we can get on with it. My hon. Friend urged that we should speed the process as much as we can. We are in no doubt as to the desirability of this stretch of motorway. We are under constant pressure from hon. Members on both sides of the House, from the local authorities, and from many others to get on as quickly as possible.
This was originally one of our main projects, but, as the hon. Member for Normanton (Mr. A. Roberts) reminded us, we met considerable difficulties in finding an acceptable line for the motorway. I hope to say something later about the statutory processes through which we have to go, but the first stage is to draw a line and decide where the motorway will go. I would refer the hon. Member for Normanton to the Adjournment debate on 11th November, 1959. During that debate I gave a full and comprehensive account of exactly what had happened in connection with drawing the line. It was certainly no fault of the Ministry of Transport that a line could not be found and established more quickly than it was.
There was certainly no bias against Yorkshire. On the contrary, the very fact that we were unable to get on as quickly as we would have liked with the Crick to Doncaster section of the M.1 required the Minister to find some alternative. In fact he produced some additional assistance to Yorkshire and made one of his five main projects the improvement of the Great North Road and, as the hon. Gentleman knows, this is going on fast. Yorkshire has not completely suffered from this delay.
The result was that the Crick to Doncaster section could not be included in the five main projects, and it must now have a rather lower place in our order of priorities. The completion of the project and its prospects of speedy completion have to be viewed first in the light of the present road programme, and, secondly, the state of preparation of the various schemes which will be required to complete it.
As regards the first point, my right hon. Friend the Minister of Transport has already announced that the funds available for long-distance improvements on our routes during the next five to six years must principally be devoted to the completion of these five main projects, but there is no doubt that funds should become available to enable a start to be made on the Crick to Doncaster section within the same period.
I cannot make any greater promise than that at the moment, because the second point comes into play, namely, that there are these statutory processes to complete and the detailed engineering designs to be prepared. Since the first stage of establishing the line fell back for the reasons which I have mentioned, the other processes which are contingent on that had to fall back too.
May I say a brief word about these processes, because we are frequently accused of dragging our feet and of being slow in the construction of motorways—indeed, in carrying out most major works on roads—but the fact is—and I have said this at Question Time and I must repeat it—that Parliament has laid on our shoulders obligations to carry through certain statutory processes in a certain time with certain time lags built into the system. We are therefore obliged to work to that time-table.
The first stage on which we always engage is preliminary consultation with the various planning and agricultural interests owning or concerned with the land over which the road will run. That takes a considerable time, but we find that it pays, because if we can settle objections at that preliminary, early stage we save much more time later.
The second stage is the making of the scheme which establishes the line of the motorway, and once the scheme is made in draft and is published there is an


objection period of three months which must expire before we can take any further steps. Following that, once the scheme is made and the line firmly established, there is a further Order which has to be made, again in draft, to deal with what are called the side roads—the roads which cross the line of the motorway—and things such as junctions. Here again Parliament lays down an objection period of three months which must expire before we can move another step. When we have completed the third stage we proceed to the acquisition of land, either voluntarily or, if need be, by compulsory purchase order. Here again there is an objection period, in this case of six weeks.
One further point which I must stress is that if at any of those stages an objection is made by a local authority and it cannot be resolved by negotiation, then we are obliged to hold a public inquiry, with all the consequent further delay which that entails.
Turning to Crick-Doncaster, the first big step, the making of the scheme to determine the line, was taken last October. The House will be interested to learn how we are getting on with the further statutory processes which I have mentioned in order that we may get on with the construction. By January of this year the consulting engineers had let us have their proposals for the necessary alterations for the side roads and the accesses in the two counties of Leicestershire and Northamptonshire. By the end of March we had completed all the detailed discussions with the local authorities and the other interests. The Northamptonshire draft Order will be published next week and the Leicestershire draft Order by mid-May. I assure the House that we have lost no time on this, in spite of our other commitments for motorways elsewhere. We could not have gone any faster than we have.
That is only the start of this task. The proposals for the remaining counties along the road are promised by the consulting engineers very shortly. The first of the land plans to enable the district valuers to start negotiating for entry will

be with us by June, and throughout the rest of this year we shall keep this programme rolling along as fast as the engineers, the authorities and we in the Ministry can make it go.
Having said this, I may be expected to say when we shall start building the road. Alas, that is something which I am afraid that I cannot do, for this reason—that objections can be made to our proposals at any stage from now on and these must be considered. Property owners and tenants have rights about which we must negotiate. We may have to hold a public inquiry. I should be rash if I tried to hazard a guess when all these processes, which affect 86 miles of new motorway, will be completed. But I assure the House that although we are not prepared to bulldoze our way through the rights of individuals—and the House would not support us if we tried—we shall start bulldozers along the motorway itself as soon as we can and we shall keep them moving quickly until this and many other motorways are completed.

Mr. Farr: Is it possible to telescope some of the processes? We realise that they are all essential, but is it possible to telescope them?

Mr. Hay: We have carefully considered that in recent months, because we were anxious to see whether there was some way in which we could expedite this procedure. I am afraid that we literally could not. Not only would fresh legislation be required but if we tried to do so we should lose more time than we should gain. There are all these bodies and all these interests which have to be safeguarded, and these people are only too anxious to complain and to object to what we want to do. We try to settle their problems as best we can. Our problem is to get on as quickly as we can, and I assure hon. Members that we intend to do that.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.